Fidelity China Special Situations (LON:FCSS) has announced its monthly summary for September 2024.
Portfolio Manager Commentary
China’s recent policy stimulus announcements were encouraging for market sentiment, reflecting the rising commitment of its leadership to deal with deflation risks and achieve stabilization in the property market. However, we need to see an improvement in macroeconomic fundamentals, which could be aided by a well-executed additional fiscal policy support. Such developments should boost consumer confidence and unlock pent-up consumption potential among Chinese households, where balance sheets are in good shape. More concerted efforts to address the property market is also critical. Although valuations in China have now become less extreme, they are still attractive, with ample potential for expansion. The expectation is that these policies can contribute to a change in economic fundamentals, leading to a better earnings outlook and a sustained improvement in market sentiment.
Conviction positions in consumer and financials names contributed to performance, including holdings in Ping An Insurance, Qifu Technology, Crystal International and Hisense Home Appliances. Financials dragged relative performance, broadly due to the underweight position in large cap Chinese banks. The communication services sector was weighed by the long-standing underweight position in Tencent.
Over the 12 months to 30 September 2024, the Trust’s NAV increased by 8.8%, underperforming its reference index, which delivered 12.7% over the same period. The Trust’s share price increased 8.7%.
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.
