The upcoming listing of e-commerce giant Alibaba Group may signal the peak for the mainland tech sector, legendary European investor Anthony Bolton says
April 7, 2014 Leave a comment
Alibaba may signal peak: fund boss
Bonnie Chen
Monday, March 24, 2014
The upcoming listing of e-commerce giant Alibaba Group may signal the peak for the mainland tech sector, legendary European investor Anthony Bolton says.
Dubbed “Britain’s Warren Buffett,” Bolton described Alibaba’s intended US listing as an “unique event” and an important time for Chinese technology stocks.
“At some stage, their [technology- related shares’] valuation is over,” the head of investment at Fidelity told The Standard. “The value may switch from new economy to old economy after Alibaba’s listing [expected] probably by the end of this year.”
Thanks to the boom in mainland technology and pharmaceutical shares, the China Special Situations fund managed by Bolton has outperformed its peers. Tencent Holdings (0700) – Alibaba’s biggest rival – is one of the major holdings of the fund.
Bolton is known for picking stocks with low valuation, and he said investors should also evaluate a company’s growth rate with peers before they consider investing in it.
For example, he cited Tencent whose instant messaging software service QQ is successful, whereas many similar platforms run by other firms are not.
Launched in 2010, China Special Situations fund can be seen as the final endeavor of the investment guru, who will retire at the end of this month.
The fund has been comparatively lackluster compared to others he managed, in line with the weak local and mainland markets, where balance sheets of several firms have come under short-sellers’ scrutiny. But Bolton described the past few years as the most exciting in his fund management career, adding his experience in the mainland market dates back to 2003.
Despite the recent defaults of some trust products and the high local government debt, Bolton still retains confidence in China’s economy.
“A Lehman-style financial crisis in China is pretty unlikely,” he said, adding that most international investors wrongly applied Western rules on China.
“Even if China only grows by 5 percent, that represents 20 percent of [Britain’s] GDP. But China should grow faster than that level,” Bolton said. China’s economy grew by 7.7 percent last year.
Bolton reiterated his three rules on investment. They are: spotting opportunity of stocks with low valuation, betting against sentiment, and tracking the pattern of history.
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