4th Jun 2020 11:57
(Alliance News) - Fidelity China Special Situations PLC on Thursday reported an underperformance against its benchmark for its recently-ended financial year, as severe uncertainty over Sino-US trade relations and the Covid-19 outbreak took their toll in the period.
For the year to the end of March, the investment trust reported a net asset value negative return of 5.9%, compared to the MSCI China Index, which saw a negative return of 1.0%.
As at March 31, net asset value per share was 236.27 pence, down 7.4% from 255.03p the same date the year before.
Fidelity China's share price at the end of March was 216.00p, reflecting an 8.6% discount to net asset value.
Shares in Fidelity China Special Situations were down 0.8% at 242.50p on Thursday in London.
The investment trust said that the year was filled with uncertainty, starting with deteriorating trade relations between the US and China for the first nine months, and even after a phase one deal was agreed upon, the Covid-19 pandemic struck.
As a result, smaller stocks in Fidelity China's portfolio suffered more than larger firms, such as China Pacific Insurance Group and China Life Insurance Co, due to concerns on Covid-19's impact on agency productivity.
Biotechnology firm Hutchison China MediTech Ltd also detracted from the trust's portfolio performance, though this was due to a shareholder reducing its stake in the company, rather then negative news or results.
Fidelity China Special Solutions declared a dividend of 4.25p per share, up 10% from 4.85p the prior year.
"In these uncertain times it is appropriate to take a step back and consider the merits of investing in China through the company. Over the long-term it is clear to me that China is too big to ignore and that every diversified portfolio should have exposure to the Chinese economy; and that this is best done by focusing on the growth within China," said Chairman Nicholas Bull.
"In the shorter-term, we still have a way to go before we can declare the Covid-19 crisis over, but it does seem that China is leading the way out of this crisis economically. With factories back at work the supply side of the economy is recovering and now we need to see the demand side following," Bull added.
By Dayo Laniyan; [email protected]
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