Fidelity China Special Situations (LON:FCSS) has announced its monthly summary for February 2025.
Portfolio Manager Commentary
Stimulus measures in China show a strong commitment to boosting domestic demand. The aim is for supportive policies to drive a turnaround in economic fundamentals, leading to broader earnings growth and improved market sentiment. Recent discussions between President Xi Jinping and executives of leading Chinese technology companies signal a shift towards a more supportive regulatory landscape. While consumer confidence remains low, elevated household savings indicate potential buying power that could support recovery once confidence is restored. Investor enthusiasm around DeepSeek continues to drive market sentiment while potential further tariff hikes from the Trump administration raised some concerns.
Encouraged by DeepSeek’s breakthrough, internet and technology-led names in China rallied towards the end of the period. Against this backdrop, the lack of exposure to Xiaomi and an underweight position in Alibaba, Meituan and Tencent, weighed on relative performance. The holding in Tuhu Car held back gains. Conversely, optimistic business prospects underpinned by the acquisition of a Swiss IP and strengthening ties with BYD led to an upward trajectory for automaker Hesai Group. LexinFintech remained a notable contributor to performance. VNET was supported by AI-driven demand for its data centres.
Over the 12 months to 28 February 2025, the Trust’s NAV increased by 33.9%, underperforming its reference index, which delivered 39.7% over the same period. The Trust’s share price increased 37.6%.
Fidelity China Special Situations PLC (LON:FCSS), the UK’s largest China Investment Trust, capitalises on Fidelity’s extensive, locally-based analyst team to find attractive opportunities in a market too big to ignore. It invests in the public equity markets of China.
