Up 5%, close on 4.5% and nearly 7% respectively, share prices of the Scottish Mortgage Investment Trust (SMT), the Polar Capital Technology Trust (PCT) and Allianz Technology Trust (ATT) are enjoying firm upward momentum on Wednesday.
Certainly a lot better than the relatively modest rebound seen across wider London stock markets. The FTSE All Share is barely managing a 0.6% rise today in response to yesterday’s sell-off, and the blue-chip FTSE 100 has nudged just 0.5% higher by early trading at around 10am.
REACH ACROSS THE POND
The reason why is linked to the much firmer bounce seen on stock markets across the pond overnight as US investors bought the dip.
The Dow Jones Industrial Average rebounded by 2.3% overnight after Monday's bloodbath and biggest one-day sell-off (in points rather than percentage terms) in US equities in over six years.
By the close the Dow ended 567.02 points to the good at 24,912.77. The broader US equity benchmark, the S&P 500, meanwhile rallied 46.2 points (1.74%) to 2,695.14 while the tech-laden Nasdaq Composite put on 148.36 points (2.13%) to 7,115.88.
LARGE EXPOSURE TO BIG TECH
Scottish Mortgage, Polar Capital Technology and Allianz Technology are all heavily invested in the US market, largely through the huge technology giants that typically dominate the globe.
Companies like Apple (AAPL:NDQ), Amazon (AMZN:NDQ), Google parent Alphabet (GOOG:NDQ), Microsoft (MSFT) and Facebook (FB:NDQ), significantly the world’s five largest companies right now. You can read why such companies are liked in Shares recent technology feature.
For example, Amazon is the biggest single stake for both Scottish Mortgage and Allianz, with 8.7% and 6.4% of their respective funds in the online retail colossus. It is Polar’s eighth largest holding at present but that still means a significant 2.4% of its funds.
Similarly popular, Apple sits at number two in terms of stake size for both Polar (6.9% of funds) and Allianz (5.5%), while Alphabet holdings are also substantial for the trust pair (at 7.9% it’s Polar’s largest, Allianz at 2.8%).
Other big bets on US tech across the trio of trusts include Facebook, Microsoft, and enterprise software pair ServiceNow (NOW:NYSE) and Salesforce (CRM:NYSE).
INVESTORS BUYING THE DIP
So Scottish Mortgage, Polar Capital Technology and Allianz Technology all have weighty exposure to the sharp rally staged by many of these tech giants overnight.
Amazon rebounded 6.6% during Tuesday’s US trading session, Apple and Facebook rallied around 4% a piece, while Microsoft recovered 3.8%, effectively wiping out all losses run-up during Monday’s selling bloodbath.
