South Korean and Taiwan technology stocks boost Fidelity Emerging Markets trust

Portfolio Manager Commentary

Emerging markets rose in March and performed broadly in line with most developed markets. At the start of the period, the market struggled with risk-off sentiment as turmoil among developed market banks raised concerns over global financial instability. Sentiment then reversed from mid-March as these concerns began to fade. Emerging market equities were also supported by indications that China was increasing support for the internet sector and carrying out reforms aimed at state-owned enterprises.

The portfolio underperformed the index over the month as select Chinese consumer holdings declined. These include sportswear company Li Ning which released mixed financial results during the month. Whilst China’s reopening provides a tailwind for consumption, mixed results in the short-term do not come as a
surprise to the team. The underweight exposure to internet company Tencent was also a detractor although this was offset partially by our overweight position in Naspers, which owns 28% of Tencent.

A number of Taiwanese and South Korean technology holdings performed well over the month given the growing expectation of demand recovery in China. Investors were focused on the potential bottoming out of the semiconductor down-cycle and recovery later in 2023, which boosted the positions in Taiwan Semiconductor Manufacturing Company and SK Hynix.

On a rolling 12-month basis, the Company recorded NAV and share price returns of -8.6% and -11.5% respectively, compared to -4.9% 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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