Bolton forecasts rush of money into emerging markets

Money will flow from the developed world into the emerging economies once the ‘dust has settled’ from the economic crisis, Fidelity’s Anthony Bolton has predicted.

Renowned fund manager Bolton, who is president and portfolio manager of the Fidelity China Special Situations Fund, was speaking at a conference in London today.

Teera Chanpongsang, manager of the Fidelity Emerging Asia fund, adds that economic growth in the emerging Asian markets – India, China, Indonesia, Malaysia, the Phillippines and Thailand, in particular – will improve as the developed world’s growth slows down.

‘There’s strong earnings growth in these countries, as well as favourable growth trends. There’s a young population [43 per cent of emerging Asia is under 25], which means a growing working population and a growing middle class,’ says Chanpongsang. ‘Emerging Asia valuations are close to historic lows. The structural growth story and earnings growth story is still intact.’

Allan Liu, manager of the Fidelity South East Asia fund, labels smaller Asian markets such as Indonesia and Thailand as ‘attractive long-term growth areas’ with ‘attractive valuations’. He adds that they continue to benefit from increased demand from neighbour China. GDP growth in the Asia excluding Japan region has hit 7.5 per cent this year, according to Liu.

However, the International Monetary Fund (IMF) has cut its forecast for emerging market growth for 2011 to 6.4 per cent from 6.6 per cent. It also cut its global growth forecast to just 4 per cent for 2011 and 2012, with developed markets set to grow just 1.6 per cent over the year, a downward revision of 0.6 per cent from June’s projection.

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