11th Jun 2024 10:12
(Alliance News) - Fidelity China Special Situations PLC on Tuesday said that a major risk to its cautiously positive outlook was the upcoming US presidential election, as it outperformed its benchmark.
The China-focused investment trust said net asset value per share fell 18% to 223.71 pence each as at March 31, when its financial year ended, from 274.08p a year prior.
The company noted that the Chinese stock market remains one of the most lowly-valued large liquid markets in the world, with performance having been disappointing for three consecutive years.
"It is always difficult to know when share prices will start to reflect intrinsic value rather than being marked down on poor sentiment. However, the companies in the portfolio continue to show strong earnings growth, and we remain confident that the market will come to appreciate the value on offer in the future; it may already have started to happen," Fidelity China said.
NAV total return swung to negative 16% from positive 2.6%, but outperformed its benchmark, the MSCI China Index, which had a return of negative 19%.
The company proposed an annual dividend of 6.40p per share, up 2.4% from 6.25p a year ago.
Chair Mike Balfour said: "While the Chinese economy remains sluggish, having failed to reap fully the benefits from the post-Covid reopening, there are undoubtedly signs of improvement."
Pertinently, he added that "perhaps the major risk to our cautiously positive outlook is the forthcoming US presidential election".
"US relations with China have stabilised somewhat, although increasing tariffs and trade restrictions remain a concern. There is a significant risk that relations could worsen and US may implement measures such as raising tariffs on imports from China to 60%, which would significantly harm Chinese exporters and would depress global trade and exacerbate US inflation trends."
Fidelity China shares were down 0.3% at 218.83 pence each on Tuesday morning in London.
By Tom Budszus, Alliance News slot editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.