Fidelity China Special Situations (LON:FCSS) has announced its monthly summary for January 2025.
Portfolio Manager Commentary
Stimulus measures in China show a strong commitment to tackling economic issues and 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. While consumer confidence remains low, elevated household savings indicate potential buying power that could support recovery once confidence is restored. Of late, Chinese equities gained driven by positive economic indicators and less severe tariff possibilities from the US. The emergence of DeepSeek also prompted investors to reevaluate China’s AI potential and bolstered a market rally in AI related sectors.
Unlisted holdings Pony Ai and Chime Biologics detracted from returns. An improvement in investor sentiment post China’s stimulus measures is yet to be priced in their value. Not holding Xiaomi limited gains – investors remain optimistic about its position as a premium consumer electronics player. An underweight position in Meituan and the holding in Tuhu Car, held back returns. Preferred consumer finance names boosted performance, with LexinFintech and Qifu Technology being notable contributors. Internet data centre (IDC) services provider VNET advanced on expectations of significant capital investment into IDCs by its key client Bytedance.
Over the 12 months to 31 January 2025, the Trust’s NAV increased by 32.8%, underperforming its reference index, which delivered 38.2% over the same period; the share price increased 27.4%.
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.
