Euro was a “misguided experiment”, says Bolton
Fidelity fund manager Anthony Bolton says further political integration or a break-up of the euro is “still a few years away”.
He says: “I have never been a fan of the euro and today we are fully exposed to all the risks of that misguided experiment.
“Ultimately the politicians will have to decide between political union or breakup, but I believe this is still a few years away.”
Bolton was speaking after it was announced that the half-year results for the China Special Situations fund had seen it underperform its MSCI China index benchmark, as net asset value dropped 28.9 per cent.
Bolton says while it remains to be seen whether bail-out measures can calm markets, he does not believe a major recession is inevitable or imminent.
The fund manager adds: “Investors’ timescales and real-world timescales are often mismatched.
“Investors expect events to have an immediate influence on activity, but this process often takes many months.
“Many compare the situation at European banks with the investment banks after the subprime crisis. I think it is different.
He says: “Those were mainly investment banks: now it is commercial banks. Then it was subprime and collateralised debt obligations, now it is the debt of peripheral countries that is the risk - these are quite different risks.”
Bolton says he believes European governments will support banks who need capital guarantee and liquidity.
“I do not think any country will let one of its major banks default even if it means a downgrade of that nation’s credit rating,” he says.
“My strongest view is that with a black cloud looming over Europe for several years to come, investors in those markets will look elsewhere for growth, provided exchange controls do not stop them doing so.”