China's Great Leap Forward; City Focus

Article excerpt

Byline: From Tessa Thorniley in Shanghai

STANDING in a vast white hall on Shanghai's Bund, Anthony Bolton admits with a wry smile that he sometimes felt 'a bit mad' to have taken on a new career as a stock-picker in China.

If producing consistent returns for 28 years as the head of the Fidelity Special Situations fund was a tough act, imagine trying to replicate that success in some of the most volatile and irrational markets in the world.

Bolton said: 'A guy took me aside recently and asked, "Why are you doing this? There's only downside. If you succeed everyone will say they expected it and if you fail you will ruin your reputation.

"'

Fortunately, Bolton says he has no fears about losing his reputation. Instead he is being driven by an instinct that China is too good an opportunity to pass up.

Outside the granite buildings that line the famous Huangpu river waterway is a reminder of what drew Bolton to China.

A giant bronze bull, a replica of Wall Street's statue, cast by the same artist only at twice the size, is a potent symbol of China's determination to transform itself into the most important market in the world.

Unlike its Wall Street cousin, however, Shanghai's bull has had to be cordoned off and guarded against crowds of people eager to rub its testicles for good luck.

Bolton said: 'If I'm right about China, what has been happening will reverse. The bears will be wrong and emerging markets money that has been flowing away from China will flow back in.'

China's booming economy means Beijing is now on every investment banker's speed dial - along with Russian oligarchs and Middle Eastern sheiks - when Western trophy assets come up for grabs.

Only yesterday, the country's main sovereign wealth fund was forced to deny reports that the Chinese state is set to buy Liverpool Football Club.

Bolton is more interested in the opportunities inside China, and he even remains bullish about the prospects for the Shanghai exchange.

So far this year, it has been the worst performing market in the world, falling 25pc as the Chinese government tightened its monetary policy and put the brakes on the runaway economy.

'When is the turnaround going to come? Later this year the Chinese government, which was first to start tightening its policy, may begin to loosen it if it thinks inflation has peaked. That could be the catalyst for the recovery of the Ashare market (Shanghai-listed Chinese companies),' he said. …