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LONDON (Alliance News) - Fidelity China Special Situations PLC on Wednesday reported an underperformance against its benchmark in the recently completed financial year, due to a volatile period for Chinese equities.
For the year to the end of March, the investment trust saw a net asset value negative return of 5.3%, compared the MSCI China Index, which saw a total return of positive 0.9%.
Net asset value per share as at March 31 was 255.03 pence, down 6.4% from 272.55p o the same date a year before.
Fidelity China's share price at the end of March was 235.00p, reflecting a discount to net asset value of 7.9%.
Shares in the investment trust were 0.2% lower on the day Wednesday at 207.03 pence, having declined a further 12% since the financial year-end.
Fidelity China said that although the Chinese market started the year strong, the implementation of US President Trump's trade tariffs on Chinese exports to the US stifled market optimism. There was a slowdown in China's broader economy within the second half of 2018, marked by falls in China's manufacturing and non-manufacturing purchasing managers' index readings.
More specifically, Fidelity China suffered from declines in the consumer and technology sectors, as well as from not holding investments in larger, more defensive state-owned enterprises, such China Mobile and Ping An Insurance.
Fidelity China declared a dividend of 3.85 pence per share, up 10% from 3.50p the prior year.
"China remains a good stock-picking market. Volatility seems likely to continue and macro-economic and geopolitical noise will continue to impact the market from time to time. We remain focused on what matters most - the companies. For those operating in the sectors which are the main focus for the portfolio, such as, consumer, information technology and healthcare, the underlying growth drivers are strong," said Portfolio Manager Dale Nicholls.