London’s best-known stock-picker, Anthony Bolton, yesterday said he took a positive view toward emerging countries with sizable domestic markets, such as China and India, to offset weakened demand in developed countries.
“You will see more and more money from the developed world flow into China,” Bolton, president of investments at Fidelity International, told a media briefing yesterday in Taipei — the final leg of an Asia trip.
Following a mild rebound in exports, the credit expansion in China, which is mostly used to build up inventories, will be the main driver of the Chinese economy, Bolton said.
However, he said Asian exporters with a focus on end markets in the US and Europe may underperform those exporting to the Asia-Pacific region.
Taiwan would benefit from the boom in China, especially as economic cooperation between the two countries deepens, he said.
Overall, the recent bull market, which began in March, will last for another year or two in a favorable low growth and low interest rate environment, he said.
World governments will keep their stimulus efforts running for a longer term, rather than the short term, to sustain the economic recovery, although risk in leverage overhang, re-climbing interest rates, the return of inflation and tightened regulation raises concerns, he said.
The bull market won’t end even if the central bankers raise interest rates for the first few times, Bolton said, while the return of inflation won’t be a problem in the next two to three years.
Bolton, who has often urged investors to invest against the tide, said it was not too late to buy because the valuation of equities remains relatively attractive although “the bargain phase [in March] is over.”
Bolton reiterated his top four picks for future gains — consumer cyclicals, technology, value stocks and the financial sector — forecasting a shift from cyclicals to growth stocks over the medium term.
He placed an underweight position on industrial cyclicals and commodities, the latter of which he said had led the last bull market and began to see weakened demand amid rising supply.
Bolton also favored gold, saying that investors should consider having some exposure to gold, while forecasting crude oil prices should range between US$50 to US$80 a barrel in the coming year.
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