Fidelity China Special Situations (FCSS ) fund manager Dale Nicholls gives the example of a Chinese company doing very well in spite of the slower-than-expected post-Covid recovery. Shares in Lao Feng Xiang, a holding in the trust, have risen 67% in the past year (aas of 28 July).

This is the fourth and last excerpt from our virtual event with Nicholls earlier this month. If that’s whetted your appetite, watch the other excerpts or the whole one-hour Big Broadcast, which includes a full transcript, the manager’s presentation and answers to questions from Citywire’s Gavin Lumsden and the audience. 

Can’t watch now? Read the transcript

Dale Nicholls:

I wanted to bring in one in the consumption area. So Lao Feng Xiang is one that we like in the jewellery space. So again, a very strong record of rolling out stores. I think there’s a lot of focus on things moving online, but definitely, offline is not going away and here we have a company that is really doing extremely well in that mid-range area. When we talk about some of the consumption trends, what we’ve found is that there’s definitely been more resilience in the consumer at the low end and at the high end. We can talk about the factors behind that. It’s been the mid-range, particularly white-collar area, where there’s been more concern, but here’s a company in that area that’s actually executing really well. There’s a really strong story of consolidation here.

The strong story of consolidation, I know I touched on it earlier, but it’s a very strong one in China. You’ve got a lot of industries that are extremely fragmented and what we’ve noticed through Covid is that you’re seeing a real distinction coming through between the winners and losers. This is an example of a company that we’d definitely put in the winner category.