Fidelity China Special Situations (LON:FCSS) has announced its monthly summary for October 2024.
Portfolio Manager Commentary
Despite the rally in Chinese equities following late September’s stimulus measures, market sentiment remains mixed as investors await further details on the scale and deployment of these programs. We are closely monitoring announcements from Chinese officials’ policy meetings, especially those addressing the property inventory overhang. While China’s overall earnings outlook is not weak in a global context, supportive policies could improve economic fundamentals, leading to a better earnings outlook. Chinese equities have now moved from ‘historically cheap’ to ‘still pretty cheap’ compared to global markets, with room for further valuation expansion. Geopolitical concerns, particularly US tariffs on Chinese goods, persist, and we continue to evaluate different scenarios and their impact on valuations.
Selected consumer discretionary names declined, primarily due to weaknesses in Pony.ai and Hesai. Healthcare holdings in Zhaoke Ophthalmology and Wuxi Apptec retreated. An overweight in financials, through insurers and financial services, contributed to performance, with Ping An Insurance, Qifu Technology and LexinFintech being notable contributors. Security selection in consumer staples enhanced gains.
Over the 12 months to 31 October 2024, the Trust’s NAV increased by 9.8%, underperforming its reference index, which delivered 14.9% over the same period. The Trust’s share price increased 8.6%.
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.
