Fidelity China Special Situations PLC: update from Dale Nicholls

Tom Stevenson, investment director at Fidelity International recently met with Dale Nicholls, portfolio manager of the Fidelity China Special Situations investment trust in our London studio.

April marked the tenth anniversary of Dale managing the trust. This comes at a time when the Chinese market has been largely out of favour with investors, but is that about to change?

Dale said that as a bottom-up stock picker, an investment approach that focuses on analysing individual stocks, China is a pretty good market.

“Looking at China, it’s heavily influenced by geopolitics and macro decisions, whereas on the ground, companies are getting on with it. These companies are delivering earnings growth, with clear winners emerging. China is also seeing better shareholder returns in terms of buybacks and dividends,” said Dale.

Tom highlights that there are risks involved in investing in China, with regulation being a key issue.

“The past few years, we’ve been through the hardest and longest tightening regulation, but I’d argue that the regulatory environment domestically is quite different and there is a lot more support on growth,” said Dale.

“There are companies that are impacted by policies that are coming out of the US. At the same time, domestically, the economy has slowed and we’re going through a pretty significant adjustment in the property sector, so we need to see how that plays out.”

You can watch the full video with Tom and Dale below. It includes questions on earnings, market conditions and investment trust discounts.

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. The shares in the investment trust are listed on the London Stock Exchange and their price is affected by supply and demand. The investment trust can gain additional exposure to the market, known as gearing, potentially increasing volatility. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.