Fidelity China Special Situations (LON:FCSS) published its monthly factsheet for the period ended 28 February 2023
Portfolio Manager Commentary
After a strong rally at the start of 2023, Chinese equities retreated in February. Rising geopolitical tensions between the US and China drove some profit-taking, especially in the Chinese ecommerce space. While geopolitical tensions may feed through to some investors’ perception of risk premium, we do not see this derailing the re-opening recovery, which has broadened in February amid a pro-growth environment in China. This includes further relaxation for the property sector and an improvement in job markets. All of this would support consumption-led economic growth and form a good foundation for a recovery in 2023, albeit a bumpy one in the near term.
Tanker transportation companies benefitted from tailwinds associated with oil demand recovery as air and road traffic regained momentum, thus the position in COSCO Shipping Energy Transportation advanced. Consumer names advanced amid hopes of consumption recovery and holdings in MINISO and Luk Fook added value.
On the other hand, while the stringent regulatory crackdown in internet space is behind us, intensifying competition and potential margin pressures in e-commerce industry weighed on the shares of even the most resilient players including Alibaba and Tencent.
Over the 12 months to 28 February 2023, the Trust’s NAV fell by 3.5%, outperforming its reference index, which delivered -7.1% over the same period. The Trust’s share price fell 5.3% 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.
