Fidelity China Special Situations (LON:FCSS) has published its monthly factsheet for October 2023.
Portfolio Manager Commentary
Over the 12 months to 31 October 2023, the Trust’s NAV increased by 14.3%, underperforming its reference index, which delivered 14.9% over the same period. The Trust’s share price increased
16.4% over the same period.
After a spell of increased uncertainty over China’s growth trajectory post its reopening, the mood has moved to a slightly more positive stance recently. Regulatory concerns are now less relevant, and the
narrative is again focused on growth, with China now appears to be on track to achieve 5% annual GDP growth target. While property market challenges and geopolitical risks still exist and weigh on sentiment, policy direction towards regulatory loosening is clear. Job and wage cuts have clearly hurt consumer confidence, however, we sense that the worst is behind us. Tax breaks on the purchase of electric vehicles and lower mortgage requirements for home buyers are some supportive measures already taken to boost
consumer confidence. Meanwhile, valuations in the Chinese equity market remain compelling, both in historical terms and compared to some other major markets.
Reopening beneficiaries including discretionary spending stocks and insurers posted attractive gains during the period. Holdings in MINISO, Hisense Home Appliance and China Pacific Insurance advanced. In addition, our underweight exposure to internet names including JD.com and Meituan proved rewarding. Their shares remain pressured amid intensifying competition and potential margin loss.
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.
