Fidelity China Special Situations (LON:FCSS) has announced its monthly summary for July 2025.
Portfolio Manager Commentary
China’s stimulus measures reflect a strong commitment to boosting domestic demand, aiming to drive economic recovery, earnings growth and market sentiment. In 2025, China’s economy continued to show resilience with robust industrial production and retail sales. Accelerated policy support and fiscal spending, alongside some improvement in consumer sentiment aided performance. However, challenges persisted, particularly in the real estate sector. Announcement of high tariffs by the US on Chinese goods resulted in retaliatory measures from China. Nevertheless, subsequent willingness of the US administration to engage in negotiations helped ease tensions.
Hesai Group saw significant growth after plans to scale its production to meet rising demand for its LiDAR technology. LexinFintech contributed notably amid interest from institutional investors and solid earnings. VNET benefitted from AI-driven demand for its data centres. Conversely, relative performance was hurt by the underweight position in EV brands Xiaomi and Xpeng. We prefer to have exposure to the EV theme through supply chain names instead of EV brands. An underweight position in Tencent also held back gains amid growing investor optimism around the company’s accelerated investments in artificial intelligence.
Over the 12 months to 31 July 2025, the Trust’s NAV increased by 51.5%, outperforming its reference index, which delivered 37.9% over the same period. The Trust’s share price increased 53.9%.
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.
