Emerging markets investment trusts: Indian banks enhance FEML gains

Fidelity Emerging Markets Limited (LON:FEML) published its monthly factsheet for the period ended 30th April 2023.

Portfolio Manager Commentary
Emerging markets declined in April and underperformed most developed markets. Investor sentiment was mixed during the period. Positive US employment data and slowing inflation supported markets at the start of April before sentiment declined as relations between the US and China deteriorated. The asset class rallied towards the end of the month after China reported stronger-than-expected exports and the US dollar weakened. Emerging Asia declined, while EMEA and Latin America posted positive returns.

The portfolio outperformed the index over the month, driven by the strong performance of financials names. Core Indian bank holdings HDFC Bank and ICICI Bank enhanced gains as investors reacted to
their upbeat financial results. Kazakhstan’s Kaspi rallied after it announced plans for a US listing and reported strong profit growth, while Hong Kong-listed insurance company AIA also rose after announcing strong results.

Technology and internet names were weaker due to negative headlines on China regarding geopolitical tensions and the regulation of artificial intelligence. This negatively impacted the positions in Taiwanese companies Taiwan Semiconductor Manufacturing Co and Mediatek. The sell-off in these stocks has
largely been in response to short-term negative sentiment and we retain a positive fundamental view of the companies.

On a rolling 12-month basis, the Company recorded NAV and share price returns of -7.4% and -9.3% respectively, compared to -6.6% for the index.

Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.

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