Fidelity China Special Situations (LON:FCSS) has announced its monthly summary for November 2023.
Portfolio Manager Commentary
After a spell of increased uncertainty over China’s growth trajectory post its reopening, the mood has moved to a slightly more positive stance recently. Regulatory concerns are now less relevant, and the narrative is again focused on growth, with China now appearing to be on track to achieve its annual GDP growth target. While property market challenges and geopolitical risks still exist and weigh on sentiment, policy direction towards regulatory loosening is clear. Job and wage cuts have clearly hurt consumer confidence, however, we sense that the worst is behind us. Tax breaks on the purchase of electric vehicles and lower mortgage requirements for home buyers are some supportive measures already taken to boost consumer confidence. Meanwhile, valuations in the Chinese equity market remain compelling, both in historical terms and compared to some other major markets.
Security selection within the consumer discretionary sector enhanced gains and holdings in MINISO and Hisense Home Appliance advanced. Healthcare positions in GNI Group and WuXi AppTec were supported by their upbeat results. Our underweight exposure to internet names including JD.com, Meituan and PDD proved rewarding.
Over the 12 months to 30 November 2023, the Trust’s NAV decreased by 2.2%, outperforming its reference index, which delivered -9.9% over the same period. The Trust’s share price declined 0.8% over the same period.
