Fidelity's Bolton Sees Stock Market Rally Continuing (Update2) By Saeromi Shin
Oct. 21 (Bloomberg) -- Fidelity International's Anthony Bolton said investors can still benefit from the rally in stocks as global markets may advance for a "considerable" time. Low interest rates will spur investment in riskier assets including equities, and valuations are still "attractive," according to documents handed to reporters before a speech by Bolton, president of investments at Fidelity, in Seoul today. Investor sentiment has moved to "optimistic" from "pessimistic," according to the documents. The MSCI World Index, a gauge of 23 developed countries, has soared 69 percent from this year's low on March 9. The MSCI Emerging Markets Index, a benchmark for 22 developing nations, has more than doubled from its March 2 low. Developing nations make up all 10 of the world's best performing markets this year, according to data compiled by Bloomberg. The Shanghai Composite Index has jumped 69 percent, ranking China 13th. "I expect the Asian region including China to continue serving the role of growth engine for the world economy," Bolton was quoted as saying in a Korean-language press release. "For China's market, there's a possibility of a correction, but the long-term outlook is still bright." Stocks have surged in the past six months as evidence mounts that the global economy is emerging from its deepest recession since the 1930s. Governments have poured in about $2 trillion of stimulus while central banks have cut interest rates to close to zero in efforts to revive growth. Tech, Banks "Despite the fact that markets have risen well off their lows, I think we're in a bull market I expect to go on," Bolton said in his speech, advising investors to be "overweight" in technology and financial stocks in the "medium" term. "It's a multiyear bull market. I don't think it's over yet." Bolton said on March 11 that the U.K. equity market was at or near its lowest point. The nation's benchmark FTSE 100 Index, which tumbled 31 percent in 2008, bottomed on March 3 and has since rallied 49 percent. Emerging-market stocks have room for further gains in the next one to two years because of earnings and economic growth prospects, Allan Conway, head of emerging-market equities at Schroder Investment Management, said on Oct. 13. Emerging market stocks may add to their gains this year as earnings growth returns, according to BNP Paribas Investment Partners. "The relative growth being seen in some emerging markets is going to look particularly attractive against the low growth in the West," Bolton said today. "I particularly like emerging markets that can be driven very much by domestic demand, by the internal dynamics of their economy." Chinese Stocks Chinese stocks have rebounded this year as a 4 trillion yuan ($586 billion) stimulus package and record lending revived the nation's economy from its deepest slump in almost a decade. Data due Oct. 22 will show the economy expanded 9 percent in the third quarter, the fastest pace since September 2008, according to the median estimate of economists surveyed by Bloomberg. On China, "although certain parts of the economy are very exposed to exports, I think the domestic story in China is a good one," Bolton said. "That will be one of the markets that I would be favoring at the moment." Bolton's Special Situations Fund beat the FTSE All-Share Index on an annual basis by 6 percentage points from 1979 through 2007, according to Fidelity. Fidelity International is the London-based affiliate of Fidelity Investments, the world's largest mutual-fund company.
