Fidelity's Nicholls bets on Alibaba and ByteDance

Predicts short-term slowdown

The recent tech stock drop in China has left opportunities to scoop up big names in the sector, said Dale Nicholls, portfolio manager of the Fidelity China Special Situations trust.

In a portfolio update today (26 May), Nicholls argued that despite negative market sentiment there were strong opportunities in the country, stating that he had increased his personal holdings in the trust and risen net gearing for the portfolio up to over 124%. Nicholls noted that factoring out the value of cash and investments, Alibaba "is trading at a single digit price/earnings ratio. Although it does face some competitive challenges, it remains the dominant platform in China and generates very high returns on capital". He went on to argue that despite "plenty of challenges that a...