Bolton’s trust starts share buybacks to tighten discount

Anthony Bolton’s £674m Fidelity China Special Situations fund has made its first share buyback since listing on the London stock exchange fifteen months ago.

The trust's board has bought back 100,000 of its own shares at a price of 83.25p per share, in a bid to reduce the company's discount, which has widened out to 4.3%, according to Winterflood.

The trust's discount is close to its one-year high of 8%, prompting the company's board to step in to attempt to steer it towards par.

"The company's board has decided to buy back shares in order to address the trust's discount," said a spokesperson.

The trust was trading between an 8% and 10% premium at the end of last year before the group announced a C-share issue which raised £166.25m.

Last month analysts at J.P. Morgan Cazenove downgraded the trust, from 'neutral' to 'underweight' due to its "weak" NAV performance since launch.

Another broker, Oriel Securities, also urged investors in the trust to sell their stakes and switch into global emerging markets portfolios because of risks to Chinese companies.

Tom Tuite Dalton, an analyst at Oriel, predicted in July the trust would move onto a discount on concerns over China's growth prospects after the region suffered a slowdown in the first half of the year.

Shares closed last night at 85.5p, well off the 52-week high of 124.15p.

The trust's share price fell 20% in the first half of 2011 amid a declining market, with Bolton blaming the put options he took out on the Korean index as the largest negative contributor to performance.