It is the UK’s largest investment trust with more than £6bn worth of assets to its name, but Scottish Mortgage (SMT) is firmly on the back foot on Tuesday.
Shares in the trust are down about 3.5% at 426.8p. That may not seem much but the decline represents more than £200m being wiped off its market value.
BIG US TECH EXPOSURE
Being a big fan of technology stocks is the reason why. The trust’s top six biggest stakes are all in tech, and eight of its top 10, if you count sports cars maker Ferrari. That means more than half of the trusts’ assets are invested in those eight technology companies, and presumably there are other smaller technology stakes in the portfolio.
This is bad news today given the big sell-off in the tech space on Wall Street. Overnight the tech heavy Nasdaq 100 slumped close on 3% to 6,390.84. The wider S&P 500 fell nearly 1% to 2,581.88.
MASSIVE MARKET INFLUENCE
Five of the world’s top six largest companies by market value are tech stocks - Apple, Google parent Alphabet, Microsoft, Amazon, Facebook. Combined they represent about 12% of the whole S&P 500 index so they exert huge influence over the wider US stock market.
Amazon is the big worry or Scottish Mortgage right now. The online retail giant’s share price tanked by more than 5% overnight, to $1,371.99, valuing the business at $664bn. Scottish Mortgage has a whacking great 10% of its assets tied up in the firm.
Amazon has come under fire from Donald Trump, who seems to believe that the company has become so big, and so dominant in retail, it is hamstringing dozens of other retail businesses in the US.
