Fidelity China upbeat on outlook as it outperforms benchmark

The FTSE 250 company’s share price total return for the period was 12.2%.

Over a three-year period, the net asset value total return was 95.3%, and the share price return was 91.2%, both significantly outperforming the company’s benchmark index - the MSCI China Index - which had a return of +72.4%.

Portfolio manager Dale Nicholls said he believed there was still good value relative to the long-term growth potential in the Chinese market.

“We are currently in the midst of a clear cyclical upturn in the economy,” he explained.

“Supply-side reform in areas like steel and cement has helped to lift pricing across a range of commodities.”

On the policy front, Nicholls said there was increasing rhetoric focussed on the risks associated with the build-up of credit the company had seen in the economy.

“This focus could become stronger post recent leadership changes - all positive in addressing our major concern for the long-term health of the economy.

“The environment remains positive for ongoing growth in consumption as part of the natural expansion of the middle-class, a key investment theme for the portfolio.

“While market sentiment has clearly turned more positive to the risk-reward balance around the opportunities in the Chinese market, we still find good value relative to the long-term growth potential.”