Renowned stockpicker Anthony Bolton, manager of the Fidelity China Special Situations investment trust, highlights three top holdings he expects to thrive over the medium term.
CNinsure
This is a US-listed China company and it is the largest listed insurance broker in the country. Insurance is very under-penetrated in China, so the insurance market is growing quite strongly.
The interesting thing is most of this is done direct between the buyer and the company. Brokers are developing from a small base, they are growing faster than the market overall. So you get this double growth, you get the growth of insurance and you the growth of insurance that is intermediated by buying the brokers.
CN Insure has about 50,000 agents today; over the next few years they think they can go to about 150,000 agents. I think this business can grow by a multiple over the next few years.
Tencent
This is an internet company which has the biggest instant messaging system in China called QQ, it is like MSN Messenger and has several hundred million users. They are using this base and monetising it, but starting to sell these clients services – such as games. Online gaming is a big thing in China. But there are also things like search and retailing, selling goods and services over the internet.
Hang Lung Properties
Although I am generally cautious on some of the property developers at the moment, there is a Hong Kong company called Hang Lung. What they are doing is gradually moving their assets out of Hong Kong and into the mainland. They are building up shopping centres and office blocks in China. I think this is going to be an interesting area over the medium term.
