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Scottish Mortgage (SMT) Shares Rallied Despite Weak H1 Results

Simon Mugo trader
Updated 11 Nov 2022

The Scottish Mortgage Investment Trust PLC (LON: SMT) share price rose 3.5% after the trust released its operations update and earnings results for the six months to 30 September 2022. Investors reacted well to the report as the trust’s managers reiterated their long-term investing approach and how it differs from what other funds are doing.

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Despite the investment trust experiencing a significant drawdown in the past six months, its net asset value (NAV) has fallen 15%, registering a £2,368,395 decline. However, the company’s managers, Tom Slater and Lawrence Burns, are confident that the fund’s holdings will recover once the market recovers. 

SMT trimmed its Chinese Holdings due to the uncertain regulatory environment, especially after the recent re-election of Chinese leader Xi Jinping for his third term as President. Xi has restructured Chinese politics making him the most powerful Chinese leader since Mao Zedong’s rule, which ended with his death in 1976.

The investment trust also reaffirmed its commitment to its largest holding, Moderna, pointing out that the biotech company’s revolutionary technology has broad applicability across the healthcare industry. A key highlight of the report was the $250 million investment Moderna received from Merck to develop a cancer vaccine jointly to treat melanoma. 

SMT further reaffirmed its commitment to Tesla, which has weathered the global supply chain disruptions caused by the COVID-19 pandemic and the Russia-Ukraine war. The only impediment to Tesla’s success if the supply of batteries to power its EVs. the EV manufacturer is able to sell every vehicle it makes, which is impressive. 

Scottish Mortgage Trust noted that powerful societal shifts had created significant investment opportunities, such as transitioning from carbon-fuelled transportation and power generation to sustainable energy sources. In addition, the push towards applying advanced technologies within the healthcare system is another significant trend with multiple opportunities. 

SMT shares have fallen 39% since the year began but have rallied higher over the past two days to trade near a crucial resistance level. Investors should monitor the stock to see if it can break above this fundamental level.

The Scottish Mortgage (SMT) share price rose 3.48% to trade at 824.05p, rising from Thursday’s closing price of 796.30p. 

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading