Fidelity Emerging Markets Limited (LON:FEML) has announced its monthly factsheet for December 2023.
Portfolio Manager Commentary
Emerging market equities continued to rally in December but underperformed developed markets. Equities were supported by optimism surrounding potential interest rate cuts in 2024, following dovish signals from the US Federal Reserve and a downward trend in inflation, which supported the prospects of a soft landing. All regions posted positive returns, led by Latin America, followed by emerging Europe, the Middle East and Africa and emerging Asia.
The portfolio marginally underperformed the index over the month. Chinese stocks continued to detract, with dairy business China Mengniu Dairy and sportswear company Li Ning both declining over the month. Although we are cognisant of the more muted backdrop for consumption in China, we continue to think that the fundamentals of these companies remain positive.
The performance of financials names was mixed. Kazakhstan’s ecommerce and payments platform Kaspi was particularly weak. Russia’s TCS Group, a provider of online retail financial services, contributed after it was partially exited over Q4, as the managers took steps to reduce exposure when liquidity was offered up. The underweight exposure to the communication services sector was a key driver of performance as market participants responded to new regulations on the Chinese gaming industry.
The Company’s NAV rose 3.8% during the 12-month period ended 31 December 2023, outperforming its reference index which rose by 3.6%. The Company’s share price rose 4.9% over the same period.
Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.
