The Scottish Mortgage Investment Trust PLC (LON: SMT) share price is up a mere 2.24% for the year, and many investors are wondering what comes next for the investment trust with a significant focus on growth and tech stocks that have fallen out of favour with investors.
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SMT’s top holding is Moderna, which was trading sideways for most of last year, but has since broken out of this range and could rally higher this year. Its other holdings have not done so well, given that Tesla, one of its top 10 holdings, is down 57% over the past year.
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The investment trust is focused on investing in the world’s most promising growth companies and generating capital appreciation by holding its positions for long periods. The minimum holding period for SMT is five years.
Some of SMT’s top holdings include Amazon.com, down over 32% in the past year, while Tencent, another top 10 investment, is down 12% over the past year. In addition, the looming global recession is predicted to affect consumer spending, which could see retailers like Amazon post further losses this year.
However, all is not lost for SMT. US stocks appear ready to rally higher as the Fed abandons its aggressive rate hike strategy in favour of a moderate monetary policy stance as the US economy shows multiple signs of cooling inflation and depressed consumer demand.
While some analysts are convinced that SMT shares will fall further as the year progresses, I believe that the probability of a recovery in the trust’s share price by the end of 2023 is very likely as the leading central banks are forced to adopt dovish monetary policies to support their economies, especially in the second half of the year.
Therefore, as a value investor, now might be a good time to buy SMT shares since they are trading slightly above their recent lows. The current trend suggests that SMT shares will not break below the 675p resistance level but could retest it before rallying higher.
*This is not investment advice.
Scottish Mortgage (SMT) share price chart.
The Scottish Mortgage (SMT) share price is up 2.24% for the year. Can it rally higher?
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.