Fidelity China Special Situations (LON:FCSS) has published its monthly factsheet for May 2023.
Portfolio Manager Commentary
China continues to be favoured for its attractive valuations and optimistic outlook for a consumption-led recovery. Although China’s economic recovery remains gradual, the re-opening recovery thesis remains intact. A release in pent-up demand in the consumer space and the overall pro-growth environment in the country will support economic growth. Geopolitical tensions between the US and China continues to dominate headlines and batter market performance. However, we do not see this derailing China’s re-opening recovery thesis. Both economies remain heavily intertwined, and the key thing to evaluate is how policies have the potential to impact the fundamentals of individual companies and building these risks into our analysis.
Preferred consumer discretionary holdings added notable value. Consumer names advanced amid hopes of consumption recovery and holdings in MINISO, Hisense Home Appliance and Luk Fook advanced. The underweight exposure to JD.com and Meituan proved rewarding as intensifying competition and potential margin pressures in the e-commerce industry led to a sector wide sell-off.
Over the 12 months to 31 May 2023, the Trust’s NAV decreased by 10.5%, outperforming its reference index, which delivered -13.3% over the same period. The Trust’s share price declined 16.5% 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.
