Fidelity China Special Situations (LON:FCSS) has announced its monthly summary for January 2026.
Portfolio Manager Commentary
After heightened volatility amid trade frictions post the “Liberation Day,” Chinese equities rebounded, supported by optimism around innovation-led growth, particularly after the launch of DeepSeek’s breakthrough AI model. While macro data softened later in the period, sentiment improved materially, as a temporary tariff truce between the US and China eased investor concerns. Global interest in China’s technology and AI ecosystem, alongside rising participation from retail investors, drove increased trading volumes and provided further momentum to the market. Meanwhile, market focus shifted toward sectors benefitting from innovation and AI development, such as technology, healthcare, and commodities, causing valuation dispersion.
Precision Tsugami advanced after reporting a strong improvement in profits and revenue, supported by healthy margins and robust demand for high-precision machine tools. An underweight position in Meituan proved rewarding as the stock declined due to falling margins amid intense price war in the food delivery business. Conversely, an underweight position in Alibaba weighed on returns as Chinese technology stocks had a good run with the AI enthusiasm. The holding in Hisense Home Appliances declined on slowing earnings growth amid margin pressure and soft domestic consumer demand.
Over the 12 months to 31 January 2026, the Trust’s NAV increased by 38.9%, outperforming the index, which delivered 23.2% over the same period. The Trust’s share price increased 43.4%
