Fidelity China Special Situations PLC (LON:FCSS) January factsheet for the period ended 31 January 2023.
Portfolio Manager Commentary
Sentiment towards the Chinese equities market was somewhat dire over the past year due to concerns over the property sector and the continuation of its Zero-COVID policy. The conclusion of the 20th Party Congress also led to widespread sell-off, which seemed to be overdone. Nonetheless, a faster and earlier-than-anticipated border re-opening is well underway and investor sentiment in China has rapidly turned around on expectation of a strong consumption recovery. A shift towards a pro-growth stance by the Chinese policymakers also improves the country’s economic outlook.
The peak of new regulatory reforms is now behind us. Authorities have laid out the framework around areas such as anti-monopoly, data protection, data sharing and cross-selling within an online ecosystem. Valuations for many such companies have moved to historical lows and look compelling versus their global peers.
Tanker transportation companies benefitted from tailwinds associated with oil demand recovery as air and road traffic regained momentum, thus positions in COSCO Shipping Energy Transportation and China Merchants Energy Shipping advanced. Consumer names also advanced amid hopes of consumption recovery and holdings in MINISO and Luk Fook added value.
Over the 12 months to 31 January 2023, the Trust’s NAV fell by 1.2%, outperforming its reference index, which delivered -2.0% over the same period. The Trust’s share price fell 2.1% over the same period.
Fidelity China Special Situations (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.