- China’s technical action had a ‘negative effect’ on the shares of some of its holdings
- Tencent. Moderna is now Scottish Mortgage’s top holding.
- Net asset value, or NAV, increased 16%; Interim dividend increased by 5% to 1.52p . to be done
extremely popular Scottish mortgage China’s top tech companies have been hit by a recent slowdown, but said Covid jab-maker Moderna could be a long-lasting booster investment.
Britain’s largest investment trust said China’s recent crackdown on big tech had ‘negatively affected’ the share prices of some of its holdings, which include Tencent and Alibaba.
However, the company said its performance had improved by the end of September, thanks to large stakes in healthcare and biotech companies such as Moderna, the US firm behind one of the COVID vaccines.
And it said Moderna’s mRNA technology would have many uses besides just Covid jobs.
US vaccine maker Moderna is now the top holding of Scottish Mortgage
“Our biggest holding, Moderna, has been the biggest contributor to this change, which effectively codes in the form of RNA to program human cells,” said Scottish mortgage managers James Anderson and Tom Slater.
‘Modernity has helped the world escape the tragedies and imprisonments of the past 18 months.
‘However, it is the breadth and scalability of its mRNA technology platform, not its COVID vaccine, that holds the greatest promise. Its pipeline of programs is both large and growing, targeting flu, Zika, HIV, cancer and many other diseases.
Moderna is now the top holding of Scottish Mortgage, which has replaced Tencent, which accounts for 9.2 percent of the total portfolio.
It is followed by another biotech company, Illumina, which makes up 5.8 percent of the total investment by the trust.
Overall, investments in biotech and healthcare have grown from 11.6 per cent a year ago to 21.4 per cent of the portfolio today.
Moderna contributed 7.2 percent to the performance of Scottish mortgages in the first half, after the fair value of the shareholding increased from £646million at the end of March to £1.94bn on 30 September.
Chinese giant Tencent, while still one of the trust’s top holdings after representing 4.1 percent of Tesla’s total portfolio, hasn’t boosted returns.
In fact, its contribution was -1.4 per cent in this period, as against 3.5 per cent in the last six months.
Other Chinese companies Meituan, NIO and Alibaba, which are the seventh, eighth and eleventh largest holdings of the trust respectively, all also had a negative impact on returns in the half year.
However, the investment trust expressed confidence in the trajectory of its investments in China, saying their performance was “surprisingly strong”.
Alibaba, the trust’s eleventh largest holding, has had a negative impact on its performance.
“Both Alibaba and Tencent continue to grow revenue by more than 20 percent, while both Meituan and Pinduoduo are growing significantly faster,” it added.
‘We will continue to assess the long-term impacts of the new regulatory approach as they apply to each of our holdings.’
Despite the poor performance of its Chinese holdings, net asset value, or NAV, for the FTSE 100-listed fund rose 16 per cent to 1,381.1p per share from 1,195.1p at the end of March.
This is compared to a 9 percent increase in the FTSE All-World Index.
Given its recent positive performance, Scottish Mortgage raised its interim dividend by 5 percent to 1.52p.
Scottish mortgage shares fell 1 per cent to £15.12 in afternoon trading on Monday.