Fidelity Emerging Markets Limited (LON:FEML) published its monthly factsheet for May 2023.
Portfolio Manager Commentary
Emerging markets declined in May. Global risk-off sentiment was triggered by concerns over weakness in China’s economic recovery and indications that the US debt ceiling could be breached. Although all emerging market regions declined, the Emerging Europe, Middle East and Africa region was the worst performer, followed by Latin America and emerging Asia.
The portfolio underperformed the index over the month. Chinese consumer names detracted given concerns over China’s economic outlook and geopolitical tensions. This includes Chinese sportwear
company Li Ning and also Hong Kong-listed businesses AIA and Samsonite. Internet company Tencent also moved sideways given weak sentiment, but our underweight exposure to the stock added to relative value. We prefer to gain exposure to Tencent via the South African holding company Naspers, which holds c.28% of the Chinese business, meaning the position in Naspers was the leading detractor.
Technology names had a good run over the month, supported by positive sentiment towards the artificial intelligence industry. As a result, the portfolio’s positions in Taiwan Semiconductor Manufacturing, SK Hynix and Mediatek buoyed performance. Brazilian positions Armac, a logistics firm, and Nu Bank, a fintech business, also featured among the contributors after reporting strong results.
On a rolling 12-month basis, the Company recorded NAV and share price returns of -7.8% and -9.9% respectively, compared to -6.9% for the index.
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.
