Fidelity China Special Situations (LON:FCSS) has announced its monthly summary for May 2025.
Portfolio Manager Commentary
China’s stimulus measures reflect a strong commitment to boosting domestic demand, aiming to drive economic recovery, earnings growth, and market sentiment. In early 2025, China’s economy continued to show resilience with first-quarter GDP, industrial production, and retail sales exceeding expectations. Accelerated policy support and fiscal spending, alongside some improvement in consumer sentiment aided performance. However, challenges persisted, particularly in the real estate sector. Towards the end of the period, US announced high tariffs on Chinese goods, resulting in retaliatory measures from China. Nevertheless, subsequent willingness of the US administration to engage in negotiations helped ease tensions, limiting the declines.
The holding in Tuhu car weighed on gains amid cautious consumer spending and a subdued outlook for the auto sector. Following the AI-driven rally in China’s internet and technology names, relative performance was hurt by the underweight positions in Xiaomi and Alibaba. Encouragingly, Hesai Group saw significant growth after plans to scale its production to meet rising demand for its LiDAR technology. LexinFintech contributed notably amid interest from institutional investors and solid earnings. VNET benefitted from AI-driven demand for its data centres.
Over the 12 months to 31 May 2025, the Trust’s NAV increased by 15.5%, underperforming its reference index, which delivered 19.5% over the same period. The Trust’s share price increased 15.1%.
