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Diary of a Dumb Investor: Anthony Bolton and I, kindred spirits

I have found a cunning way to invest in China's growing middle-class population. And for once I have actually done my research.

 
Diary of a Dumb Investor: Anthony Bolton and I, kindred spirits

I know the Chinese economy is slowing down, you often can’t trust the management of companies there, the stock market performance has been appalling, foreign investors have been stung by several cases of fraud, and the horribly unequal country is run by inscrutable communists. But oh how excited I am about finding a Chinese company to invest in!

Mr Anthony Bolton, of I-whooped-the-UK-stock-market-for-a-decade fame, also happens to own this little London AIM-listed livewire. I give you Hutchison China MediTech (HCM.L, AKA Chi-Med).

Why am I investing in the shares? Well, not because of Bolton. His track record in China, where he runs the Fidelity China Special Situations investment trust, doesn't warrant that sort of emulation. And he may have even sold out of Chi-Med since Citywire interviewed him in July.

No, I’m drawn to this stock partly because I am excited – really frickin’ excited – about the growth of China. Convinced by it. I’m even learning Mandarin, albeit excruciatingly slowly. I digress, but this famous poem, in which every syllable has the sound shi (in different ‘tones’/pronunciations), shows you the sort of hurdles a Chinese Mandarin learner – and engrossed observer of China's rise – must overcome:

It's not easy keeping up with a rising China: Click to enlarge

It’s the consumer growth in China that I want a part of. The doubling, tripling, quadrupling, quintupling, sextupling… of the middle-class population and all that. More wealthy people will want more health care. China also, believe it or not, is set to soon face the same kinds of demographic problems facing Japan or the UK: too many dependent oldies. They'll need medicines.

I also believe that the recent slowdown in the Chinese economy – which I understand has been weighing on Chi-Med’s shares – has hit bottom and the country will start turning a corner. Plus, Chi-Med’s chief Christian Hogg said in the company’s results statement a week or so ago that costs were coming down.

What's more, it has just got rid of a UK subsidiary, which makes me happy. After all, screw the UK, I want my money invested in China.

Your columnist also has a background in the regulation of pharmaceutical companies, so this company plays to my strengths.

And finally, the little bugger is London-listed, so I can keep a closer eye on it.

So yes, I’ve actually been researching this one. Some comments from analysts that I found while Googling admittedly provided the confirmation that I was craving.

How exciting!

I probably could have done with buying into the shares at the end of July, when the company published some smashing results. So now I guess I need to ‘buy into the dips’, right? Or should I just go for it now?

8 comments so far. Why not have your say?

Anthony Palmer

Aug 06, 2012 at 12:18

I could think of a suitable letter to end each word of the Mandarin poem but will refrain.

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druceym

Aug 06, 2012 at 12:18

Good Luck with that - but now that you've aligned yourself with A./Bolton

( gold medal super-hyped dreadful performer extraordinaire ) I should sell my

China Fidelity immediately ( if the losses weren't so huge ).

report this

Michael Peters Fenwicks

Aug 06, 2012 at 12:20

DI,

once again you are jumping on board late - I bought this little number in December 2011 while that has proved rather meaningful.

I say you will do well in the long term as the company has good fundamentals.

Long Term not short sighted - so well done.

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dan cahill

Aug 06, 2012 at 15:11

Fools rush in..................................................................

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gggggg hjhjkl;'

Aug 06, 2012 at 17:38

I take it this part of your chaos strategy?

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Graham D-C

Aug 06, 2012 at 17:46

Whilst others have been too focused on the fall in exports and GDP, DDI has finally latched on to a sector of the Chinese economy that is booming -- the growing spendng power of the middle-class/high saving retirees, It is this group who have the money to spend on a combination of quality household goods,healthy food and drinks and medicines to enhance and prolong their lives. Diabetes (which if left unchecked, can have severe consequences), affects 90m people in China; many of them elderly. Today, an increasing number of them can afford to buy modern medicines and pay for diagnostic equipment used in clinics and for self monitoring in the home.

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Steve123

Aug 06, 2012 at 18:31

DI,

Hutchinson China Meditech is curently up 50% from last December. Given the macro-economic climate, you would probably do better by shorting it rather than buying it.

report this

Snotter

Aug 08, 2012 at 11:44

Nah, I prefer Standard Chartered instead as a bet on China. Bought at 1131 when pannick set in on threats from USA. It also has a decent div to rely on.

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