(Alliance News) - Fidelity China Special Situations PLC on Wednesday said net asset value decreased in its latest half year along with a negative total return.
The FTSE 250 China-focused investment trust said its NAV at September 30 was 238.07 pence per share, down from 244.47p at the same time one year prior.
Shares in Fidelity China were down 1.2% at 210.45p each on Wednesday morning in London.
Fidelity China delivered an NAV total return of negative 10.9% for the six months that ended on September 30, down from negative 8.4% the year before. This underperformed against its benchmark, the MSCI China Index, which delivered negative 10.3% compared with negative 5.5% the prior year.
The company, which on Tuesday announced its agreement to absorb smaller trust abrdn China Investments Co Ltd, declared no interim dividend unchanged from the prior year.
Fidelity China said the economic outlook has remained uncertain, with Chinese equities having weathered "extreme volatility" during the period.
"One of the principal reasons why the post-Covid reopening fell flatter than expected was that consumer confidence has remained muted," Fidelity China explained. "The factors driving this include weak business confidence, particularly on the back of well-publicised job cuts at the big tech companies, and youth unemployment headlines.
"Weakness in the property market is also likely playing a part given the significant weight of property on the consumer balance sheet."
Fidelity China added however that reasons for optimism remain, such as Chinese consumers "sitting on record amounts of savings" and Xi Jinping's recent announcement that China will terminate all restrictions for foreign participation in manufacturing.
Furthermore, the trust believes "the mood music has moved to a slightly more positive tone in recent weeks". Going forward, it reassured shareholders that it is directing capital towards "great individual companies" which are being overshadowed by the negative headlines, and whose valuations will catch up with their earnings in the long-term future.
By Emma Curzon, Alliance News reporter
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Fidelity China Special Situations PLC (FCSS)