Anthony Bolton's Outlook for Equities and China

Veteran Fidelity fund manager Anthony Bolton says he believes liquidity will return to the markets in 2013

Fidelity International 18 December, 2012 | 12:37PM
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This is part of Morningstar's 'Perspectives' series, which features contributions from third parties such as asset managers, academics and investment professionals. In this article, Anthony Bolton, manager of the Fidelity China Special Situations fund (FCSS), discusses his outlook for markets in 2013.

My overall view is that a world of low growth, accompanied by low interest rates and substantial liquidity, should provide a favourable environment for equity investment.

Cash is Waiting on the Sidelines

Liquidity is not just a reflection of central bank measures such as quantitative easing (QE) but is also due to large investor cash balances, which are currently sitting on the sidelines earning very low returns. We have already seen how this has driven up the prices of bonds across the world and, in 2012, higher yielding equities have also started to benefit. I believe 2013 will be the year when these tailwinds swing behind equities in general, and that markets will be driven upwards by an expansion of valuation multiples rather than by strong earnings growth or upgrades of earnings forecasts. I think all financial assets will eventually benefit from this surplus liquidity, particularly in a world where the demand for funds from the corporate sector for investment will remain depressed. The major challenges for the American, European and Japanese economies are already well known and substantially factored into prices. Relatively low equity valuations and generally poor equity sentiment should help as equities climb their wall of worry.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Fidelity China Special Ord324.50 GBX-2.99Rating

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Fidelity International

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