Fidelity China Special Situations has announced results for the year ended 31 March 2015 that show the the Company’s NAV increased by 45.3% and the share price by 39.9%. The NAV outperformed the Benchmark Index, the MSCI China Index in sterling terms, by 6.0%.
The dividend is being increased from 1.15p to 1.3p.
The biggest contributor to returns was the company’s holding in Alibaba which IPOd in September last year. Fidelity China had invested 2.5% of its assets in the unlisted company and made a multiple of this on listing. They no longer own any unlisted companies.
CITIC Securities, one of the Company’s largest holdings, returned 224% over the year. In addition to an overall recovery in market volumes, this stock reacted positively to the lifting of an IPO ban in mainland China and the introduction of Stock Connect. Stock Connect is a programme that enables overseas investors to buy Shanghai listed A-Shares via the Hong Kong Exchange without the need for a Qualified Financial Institutional Investor (“QFII”) quota, while allowing mainland investors to buy Hong Kong shares via the Shanghai Exchange without the need for a Qualified Domestic Institutional Investor quota. Holdings in Ping An Insurance and China Pacific Insurance rallied 109% and 114% respectively.
The manager also reports on saw strong moves in other A-Shares the Company holds including SAIC Motor (joint venture with Volkswagen and GM) and Gree Electrical Appliances (the world’s largest air conditioner manufacturer). The manager has been focusing on larger capitalisation A shares which he believes are under researched and not subject to the same speculative activity by Chinese investors as smaller companies.
FCSS : Impressive year for Fidelity China