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Fears of a slowdown in China are ironic, says Dale Nicholls, manager of the Fidelity China Special Situations (FCSS) investment trust.
In this video interview says economic growth of 4-5% this year would be good by international standards. Besides, he says: 'Whatever the final number is you can be sure consumption is growing faster.' This is why Nicholls has continued to position the fund in areas exposed to the country's growing middle class.
Although Nicholls shares investor scepticism of China's banking sector following an explosion in credit and bad lending, he believes the country is making a successful transition from an investment-led economy to a consumer-led economy.
Nicholls recently gained shareholder approval to increase investment in unquoted companies up to 10% of the fund's assets. He says this is not about increasing the risk of the fund but to give it more flexibility to invest in exciting companies, which are listing on the stock market later in their development. The fund benefited from the mega-flotation of e-commerce site Alibaba a few years ago and would like to repeat that success again, if possible.