Anthony Bolton, the president of investments at Fidelity, has told investors to “expect the unexpected in Hong Kong”, pointing out a clash between its peg to American monetary policy and its links with China.
Bolton says Hong Kong is on a “tectonic plate” between China and the developing world and more advanced economies, particularly America, to which it pegs its monetary policy.
According to Bolton, this loose monetary policy is not producing a bubble yet, but “undoubtedly at some stage things will go too far”.
Investors are fearing a real estate bubble in more developed Chinese cities, including Hong Kong but also Shanghai and Beijing
Bolton still owns the Hong Kong-listed shares of Bank of China. He says the bank has a monopoly on Chinese currency passing through Hong Kong, which will reap benefits as the currency becomes more international. (article continues below)
Overall, he has more positions in Hong Kong-listed bank stocks than mainland-listed bank stocks.
He says Hong Kong stocks now trade at a discount and may well close the gap with their mainland counterparts.