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Strong Performance Forecast for Chinese Equity Fund in 2025

(Bloomberg) — A manager overseeing a significant $3.4 billion Chinese equity fund, which has notably outperformed nearly all its competitors in 2025, is optimistic about a potential resurgence in consumer confidence. This confidence is expected to provide a substantial boost to domestic shares, further enhancing investment returns.

Positive Economic Indicators

Hyomi Jie, from Fidelity International, believes that households with significant cash reserves, combined with Beijing’s commitment to fostering consumption, will catalyze a rally in stocks once overall sentiment picks up. Noteworthy among the top holdings in her Fidelity Funds – China Consumer Fund are prominent players like internet titan Tencent Holdings Ltd. and the sportswear giant Anta Sports Products Ltd. This fund has delivered an impressive 16% return, outperforming 99% of its peers this year.

Consumer Confidence and Spending Dynamics

According to Jie, the sluggish consumer spending observed in China—now the world’s second-largest economy—results primarily from weak sentiment rather than an actual scarcity of financial resources. She states that an improvement in consumer confidence could lead to a rise in spending, subsequently bolstering the overall sentiment toward broader Chinese markets. "When consumer confidence improves, spending will increase and support the overall sentiment toward broader Chinese markets,” Jie emphasized.

Sector Performance

The recent performance of China’s equity markets has shone particularly bright, outpacing most regional peers in 2025, largely due to a surge in technology stocks driven by DeepSeek innovations. However, it’s encouraging to note that additional sectors are beginning to join this upward trajectory. For instance, the MSCI China sub-index tracking consumer discretionary shares is performing robustly, marking a remarkable jump of about 27% this year—making it the second-best performing sectoral gauge right behind technology.

Government Initiatives in Boosting Consumption

The rise in equity market gains aligns seamlessly with the Chinese government’s efforts to enhance consumption through a range of incentives, including significant subsidies and higher household savings. This stimulation appears to be yielding results, as evidenced by retail sales growth exceeding initial forecasts during the first two months of the year.

Focus on Sportswear

Jie, residing in Singapore, expresses particular enthusiasm for China’s burgeoning sportswear industry. She has been actively investing in Anta since assuming control of the portfolio in 2020, with the stock having risen 11% this year alone. “The sportswear industry in China is one of the largest and fastest growing globally, driven by a growing millennial demographic and an increasing focus on health and fitness,” she stated. Jie believes that Anta’s strategic diversification in brand development allows it to cater to a wide array of consumer needs across different price points.

Broader Investment Portfolio

In addition to her holdings in Anta, Jie also owns shares in PDD Holdings Inc., the parent company of Temu, and the esteemed gaming firm NetEase Inc. While her fund has led the pack in 2025, it should be noted that it has not performed comparably over a longer three- to five-year timeframe, according to data from Bloomberg.

Embracing AI in Investment Strategy

Importantly, more than a quarter of her fund’s holdings are comprised of companies involved in artificial intelligence infrastructure, including giants like Tencent, Alibaba Group Holding Ltd., and Baidu Inc. Jie underscores that these firms stand to benefit significantly from the recent advancements in AI technology, fueled by DeepSeek’s cost-effective innovations. “DeepSeek’s breakthrough was born of constraint,” she remarked, highlighting that "the efficiency gains are considerable and will resonate across multiple sectors."

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