Scottish Mortgage: Is a Recovery in Sight for 2023?

The Scottish Mortgage is down by almost a percentage point in today’s trading session, extending the bearish trend that has seen its value dropping by 8 percent this month and by over 45 percent year-to-date. However, despite struggles in 2022, Scottish Mortgage continues to be of interest to many investors:

Scottish Mortgage Fundamental Analysis for 2023

Scottish Mortgage Investment Trust, a favorite among retail investors, had a turbulent year in 2022. The trust’s net asset value fell by 15% in the six months to September, and its shares were down nearly 48%. However, there are hopes that 2023 will be a better year for Scottish Mortgage and tech investments around the world.

Dan Ives, an analyst at Wedbush Securities, said that he believes the underlying setup for the tech sector has created many opportunities for growth investors willing to look beyond the current difficult macroeconomic environment. He expects the sector to be up roughly 20% in 2023, with Big Tech, software, and semis leading the charge despite the potential risks presented by macroeconomic and Federal Reserve factors.

Scottish Mortgage’s largest holdings are in Moderna, Tesla, and Kering. In the penultimate session of the year, the trust’s shares rose 3.7%, or 25.8p, to 715.8p on the back of a positive day for its portfolio. Shares in Tesla rose 8.1%, or $9.11, to $121.81, after CEO Elon Musk urged his staff not to be “bothered by stock market craziness.” Investors will be hoping for more of the same in the coming year.

It is worth noting that Scottish Mortgage’s exposure to China has not worked in its favor this year, with concerns around regulation and heavy-handed interference in the country, as well as ongoing lockdowns, weighing on Chinese stocks. However, if China is able to deal with the Covid-19 pandemic more effectively in 2023 and the Communist Party takes a lighter touch with regulation, it could potentially lead to a rally in the trust’s shares.

Overall, while the year ahead may still present challenges, there is hope that tech investments will perform well in 2023. Scottish Mortgage’s strong portfolio, including leading companies in the tech sector, positions it well to take advantage of potential growth opportunities.

Therefore, based on the information provided above, there is a high likelihood that, in 2023, we might see Scottish Mortgage share price recovering from the over 45 percent drop experienced in 2022. As seen from the above fundamental analysis, the company remains an interesting choice for most investors going into 2023.

Scottish Mortgage Daily Chart