Fidelity China Special Situations (LON:FCSS) has announced its monthly summary for February 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. Sentiment has turned relatively positive following upbeat travel and economic activity data over the Chinese New Year holiday period and the overall trend points towards a continued recovery in growth. 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. 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. An underweight exposure to Meituan proved rewarding. Its shares remain pressured amid concerns over a lacklustre consumer spending recovery and intensifying competition.
Over the 12 months to 29 February 2024, the Trust’s NAV decreased by 19.3%, underperforming its reference index, which delivered -17.8% over the same period. The Trust’s share price declined 20.2% 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.
