Fidelity China Special Situations (LON:FCSS) has announced its monthly summary for January 2024.
Portfolio Manager Commentary
China is at a different point in the economic cycle compared to the West. Risks of an economic slowdown has increased in the US and Europe amid higher interest rates. Inflation has not been a problem in China and the government is taking measures to stimulate investment and consumption. Despite sluggish economic activity, the overall trend still points towards an economic recovery. Consumer confidence remains soft, mainly due to a weakened property market, but the government is addressing this by implementing various measures. A substantial amount of household savings sets the stage for an upswing in consumer spending once confidence is restored. Improved corporate earnings could be a key driver for the return of broader investor confidence. Valuations in the Chinese equity market are very compelling both in historic terms and vs other markets.
Security selection within the consumer discretionary sector enhanced gains and holdings in Hisense Home Appliance and Crystal International advanced. Shares in BC Technology rose amid the overall strength of cryptocurrency prices. Our underweight exposure to internet names including JD.com proved rewarding. Its
shares remain under pressure amid concerns around a lacklustre consumer spending recovery and intensifying competition.
Over the 12 months to 31 January 2024, the Trust’s NAV decreased by 31.0%, outperforming its reference index, which delivered -31.3% over the same period. The Trust’s share price declined 32.4% over the same period.
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.
