‘A billion users and more potential than Facebook’

When star fund manager Anthony Bolton returned from retirement in 2010 to launch a China investment trust, it attracted a huge amount of attention. The following years were troubled for the Chinese market. His successor, Dale Nicholls, who took over in 2014, has enjoyed a more prosperous period, more than doubling investors’ money.

Telegraph Money spoke to Mr Nicholls about why a growing Chinese middle class is a key trend, his concerns about increased debt, and why compromise with America is more likely than a trade war. shopping and mobile phone use continue to grow, as do the companies that benefit from those.

However, after a big uptick in certain areas of the Chinese market over the past year, I’m finding less value among the top-performing consumer and tech companies. So on the edges I’m moving towards steady growth consumer names such as personal appliance firm Shanghai Flyco, which should grow its market share.

I’m still quite cautious on Chinese banks. Banks are holding more cash, but, given the growth of credit that has been seen, loan defaults are going to become higher. I prefer insurance and wealth management stocks. Both sectors are underdeveloped, but that should increase over time as people get wealthier. They are both very large companies

CV: Dale Nicholls

in the Chinese market. Alibaba’s online shopping and cloud business is doing well, and there are increasing signs it can grow advertising revenues. Tencent’s real jewel is the social media platform Wechat. Every time I visit China I notice how integral to everyday life it is. It’s approaching one billion users, with levels of monetisation well below that of Facebook, meaning there’s growth potential.

Fidelity’s Dale Nicholls tells James Connington why he likes Tencent, the Chinese web giant

Corporate governance is more of a challenge in any emerging market. You have to do a lot of background work on management, and who they’re interacting with. A significant portion of the Chinese market is listed in Hong Kong and America however, where disclosure is better.

I don’t avoid state-owned businesses, but over the medium term it is the private companies that are driving growth, investment and employment.

I would expect growth to slow towards the end of this year. The government understands credit growth needs to slow, which is happening – I think that is positive in the long term. However, you can be pretty confident that consumption is going to grow faster. Much of it is a natural progression of the middle class, with people becoming more aspirational, which is hard to see being derailed. between America and China is not new. Tariffs on Chinese imports are already high. China is showing some willingness to open up areas such as financial services, so I think compromise is most likely. It has been closing slowly. During the most negative sentiment towards China it was in the high teens, but is now at around 10pc. There is more room to close. Online classified ad business 51job has contributed greatly to the fund. It’s the leader in China in its sector, and has also made a strong move into providing HR support. Not owning property stocks recently has hurt. They have had a fantastic 12 months. Yes, a significant portion.

It’s a combination of base salary and annual bonuses, linked to fund performance over three and five years.

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