REFILE-UPDATE 2-China lures Fidelity's Bolton back to investing

* Anthony Bolton to return to managing money in 2010

* Bolton to manage new China portfolio; launch in Q1 2010

* Bolton to move to Hong Kong in Q1 2010 (Refiles to fix wording of quote in paragraph 7)

By Parvathy Ullatil

HONG KONG, Nov 26 (Reuters) - Fidelity International's Anthony Bolton, one of the UK's best known and top performing asset managers, said he plans to return to managing money next year, with a focus on the increasingly important China market.

Bolton, who retired from active fund management in 2007, said he would move to Hong Kong early next year to manage a new China investment portfolio, which would likely be launched at the end of the first quarter of 2010.

"The centre of gravity is shifting to this part of the world and I want to play a part in it while I can," Bolton, a 30-year veteran of Fidelity, told a media briefing in Hong Kong.

Bolton shot to fame for managing the Fidelity Special Situations fund since 1979, turning every 1,000 pound ($1,670) invested at its launch to 148,200 pounds over the 28 years that he ran the fund, according to Fidelity.

Bolton, 59, is not the first high-profile British executive to announce plans to move closer to China in recent months. HSBC said in September that its chief executive, Michael Geoghegan, was moving to Hong Kong from London.

"It's not just Bolton, nobody can afford to ignore China," said Xav Feng, head of China and Taiwan research at Lipper.

"It is still a very closed market. But in future we may see a floating yuan and more liberalisation which is why companies like Fidelity are becoming more focused on asset management in China."

Bolton declined to divulge details about the new portfolio, saying simply that the fund managed by him would take bigger active bets than Fidelity's existing China-focused funds.

Fidelity International, which has been investing in China for 16 years, has $210.1 billion in assets under management globally and around $4.5 billion in its China funds.

Fidelity International is an affiliate of Boston-based Fidelity Investments, the world's biggest mutual fund company.

CHANGING TIMES

Bolton said his preference for privately-owned Chinese companies over state-owned enterprises was slowly changing as most recent scandals had involved private companies while government-controlled companies had access to the best deals.

Bolton said he was not a linguist and may not attempt to learn Chinese after he moves to Hong Kong.

He has been investing in China since 2005, in a professional and personal capacity, and has been visiting the country twice a year to meet Chinese companies. Bolton said he met 14 companies during this visit, including some newly listed entities.

"A typical British investor has about 15 percent of his portfolio invested in emerging markets now and the rest in the developed world, but that will change in the next few years," he said.

Bolton said the "bargain stage" for Chinese stocks was over, but average valuations of Chinese companies were still in line with their long term averages.

"It would have been lovely if we could have launched this fund earlier this year," he said.

Bolton said he expected long-term currency and stock market gains in China and a year into a bull market may be too early to start fretting about asset bubbles in the economy.

"I believe in my lifetime, China will become the second-largest stock market in the world," he said. ($1=.5987 Pound) (Editing by Chris Lewis and Lincoln Feast) ((parvathy.ullatil@reuters.com; +852 28436415; Reuters Messaging: parvathy.ullatil.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))