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Fidelity China Special Situations PLC said on Thursday its net asset value per share fell, as it said the impact of lockdowns in China was clear and should be an incentive for change.
The China-focused investment trust said its NAV per share on September 30 was 244.47 pence, down 10% from 272.52p on March 30 and down 30% from 348.18p a year prior. Shares in Fidelity China Special were trading flat at 221.00p in London on Thursday morning.
NAV total return in the six months that ended September 30 was negative 8.4%, performing worse than its benchmark comparator MSCI China Index, which posted a total return of negative 5.5%.
Revenue was down 6.1% to £27.8 million from £29.6 million during the same period, but up 6.5% from £26.1 million a year earlier. Pretax loss narrowed by 68% to £115.7 million from £363.1 million a year earlier, largely due to a reduction in investment, derivatives and foreign exchange losses.
Fidelity China Special said economic growth remained challenging, citing the Chinese government’s current zero Covid-19 policy and weakness in the property sector as major factors. It highlighted how this contrasted with trends in many developed markets.
‘Without a doubt, sentiment towards the China market seems dire (in fact, probably the worst I have seen), and the market action that we have recently endured has seen a number of mostly foreign investors sell down their exposure,’ said Portfolio Manager Dale Nicholls.
Nicholls said he felt the sell-down was overdone, as Fidelity China Special did not have high expectations for a shift in policy direction at the recent National Party Congress in China.
However, Fidelity China Special said the resilience of Chinese private companies should not be underestimated, reporting encouragement from an increasing number of companies opting to go private. This is alongside a reported record level of share buybacks during its financial 2023, indicating the appeal of current undemanding valuations and opportunities to add value.
Fidelity China Special declared no dividend for the half year, unchanged from a year prior.
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