INVESTMENT ADVISER | ISSUE 09 2024 25

Additionally , several technology and internet companies have increased pay-outs or buyback ratios , driving total shareholder return yield ( including both dividend and buyback yields ) into double digits . For instance , Alibaba Group Holding and Tencent Holdings have been some of the most aggressive in hiking both dividends and buybacks . For many of these companies , we are seeing shares outstanding decline for the first time .

STAYING FOCUSED ON FUNDAMENTALS

Looking ahead , despite the near-term challenges we remain cautiously optimistic about the outlook for China ’ s markets . The macroeconomic backdrop , while under pressure , is expected to stabilise as the government ’ s stimulus measures begin to take effect . Significantly , the Chinese consumer , despite current weakness , has a strong balance sheet with significant savings . This could translate into increased spending once confidence is restored . This latent demand , combined with the structural trends in sectors like industrials and technology , supports our positive longterm view .

However , global challenges remain . These include ongoing geopolitical tensions , regulatory shifts and the potential for further economic headwinds . Investors must remain vigilant and selective , focusing on

companies with strong competitive positions , robust balance sheets and the ability to navigate an increasingly complex operating environment .

While the past few years have undoubtedly been tough for all China-focused portfolios , the current environment presents a unique set of opportunities . By focusing on sectors with strong structural growth drivers and compelling valuations , we believe the trust is well positioned to benefit from an eventual recovery in China ’ s markets . As always , our focus will remain on delivering long-term value for investors while navigating the complexities of the market with a disciplined and strategic approach .

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IMPORTANT INFORMATION

This information is for investment professionals only and should not be relied upon by private investors . Past performance is not a reliable indicator of future returns . Investors should note that the views expressed may no longer be current and may have already been acted upon . Changes in currency exchange rates may affect the value of investments in overseas markets . Investments in emerging markets can be more volatile than other more developed markets . Investments in smaller companies can carry a higher risk because their share prices may be more volatile than those of larger companies . Fidelity China Special Situations PLC can use financial derivative instruments for investment purposes , which may expose it to a higher degree of risk and can cause investments to experience larger than average price fluctuations . Its shares are listed on the London Stock Exchange and their price is affected by supply and demand . The investment trust can also gain additional exposure to the market , known as gearing , potentially increasing volatility . 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 . Issued by FIL Pensions Management , authorised and regulated by the Financial Conduct Authority and Financial Administration Services Limited , authorised and regulated by the Financial Conduct Authority . Fidelity International , the Fidelity International logo and F symbol are trademarks of FIL Limited .