Scottish Mortgage Investment Trust cuts China exposure to 11%

Scottish Mortgage Investment Trust Halves China Exposure Amid Risks

Overview of Scottish Mortgage's Shift in China Investment Strategy

By Summer Zhen

Reduction in China Exposure

HONG KONG, Sept 30 (Reuters) - Scottish Mortgage Investment Trust said it had more than halved its China exposure over the past six years as it factored in geopolitical and regulatory risks.

Historical Exposure and Recent Changes

• A longtime China bull, Baillie Gifford-managed Scottish Mortgage has cut its China exposure to 11% as of September, from 24% at the end of 2020, the trust told a digital conference last week.

Factors Behind the Decision

• Geopolitical risks, in particular US restrictions on investment into Chinese companies, and China's domestic regulatory environment, have driven the decision, it said.

Manager's Perspective

• "We want to have access to these exceptional companies, but we're aware that there is a shared common risk between them," said Tom Slater, manager of the Scottish Mortgage Investment Trust.

Performance and Portfolio Overview

• The UK's largest investment trust, which invests in both public and private growth companies, had total assets of £17.75 billion ($23.55 billion) at end-August.

Chinese Stocks Performance

• Chinese stocks have underperformed global peers this year with the benchmark CSI 300 Index hitting a one-year low this week amid concerns over domestic demand and US-China tensions.

Ongoing Commitment to China

• Scottish Mortgage said it is still bullish on Chinese tech and automotive stocks including BYD, CATL and ByteDance.

Importance of Remaining Invested

• Remaining invested in China is still critical, said Linda Lin, head of the China Equities for Baillie Gifford.

China's Innovation and Growth Sectors

• In areas such as green technology, advanced manufacturing, robotics and even AI, China is not only catching up, it is setting the pace, she said.

($1 = 0.7538 pounds)

(Reporting by Summer Zhen; Editing by Alexander Smith)