Fidelity's £1.2bn China Special Situations sees returns soar

Fidelity's £1.2bn China Special Situations trust has reported a jump in net asset value of nearly 40 per cent for the year, benefiting from improvements in the Asian giant's consumer sector.

Fidelity China Special Solutions net asset value now stands at 2.5 pence per ordinary share, an annual rise of 38.9 per cent.

The company puts its continued success down to shrewd stock picking in the consumer and state-owned sectors and a more positive global attitude to China. 

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Over the 12 months to 31 March 2017, Fidelity China saw its share price record a robust increase in returns of 45.8 per cent, bettering its closest competitors in the MSCI China Index by 82 per cent.

The annual report coincides with company portfolio manager Dale Nicholls three year anniversary. Under his stewardship Fidelity China’s NAV has increased by 101.8 per cent against an Index return of 60.6 per cent, resulting in a 94.7 per cent share price hike. 

Mr Nicholls said: “The market has significantly rewarded investors over the past year. Economic fundamentals have clearly improved and this has been reflected at the company level, with many announcing much improved 2016 annual results.

“Ultimately the investment returns for the Company are an outcome of the companies in which we invest. While I look for ideas across all industries, I focus on the themes I believe can help drive future returns, such as the consumer sector, small caps, State Owned Enterprises (“SOE”s) and unlisted companies which now account for 4.1% of the portfolio following recent additions.”

Commenting on the increasing appeal of investing in the Asian markets Mr Nicholls added: “On the whole, China has showed signs of economic improvement reflected in a clear acceleration in nominal GDP growth. Challenges remain but it continues to be a dynamic economy and market, with huge variation in trends between the winners and losers.

“While the market has moved up, valuations on the whole remain compelling in a global context. The gap between China’s share of the global economy and its share of global stock markets remains significant, and I remain confident this will close over time. It is a matter of time before A-shares move into global indices.

Nicholas Bull, chairman of China Fidelity, said: “It is now increasingly accepted by investment professionals that China’s sheer economic size, along with its record of delivering year on year growth, means that anyone building an investment portfolio should consider having an exposure to China.

The purpose of Fidelity China Special Situations is to provide investors with that exposure through a spread of investments in companies involved in China.

"The directors are confident in the continuing growth in the New China economy and in the long-term growth prospects for the Company.”