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London-listed technology investment trusts brace for bleak winter
SoftBank reported a £5.3bn third-quarter loss, largely linked to write-downs in data centre projects, and said it would reassess its strategy. The result has added to concerns about the pace and returns of investment in artificial intelligence, as London-listed technology trusts have shed gains made earlier in the year.
Since last month, Manchester & London Investment Trust has lost nearly a quarter of its value, while Allianz Technology Trust is down about 23 per cent and Polar Capital Technology Trust about 21 per cent. Investors have shifted towards defensive sectors: global consumer staples gained 10.6 per cent in October, their biggest monthly rise in nearly three decades, while healthcare stocks rose 9.8 per cent. Higher interest rates and bond yields, alongside questions about AI investment costs and returns, are weighing on technology shares.
In short
- SoftBank posted a £5.3bn quarterly loss.
- Three London-listed technology trusts have fallen sharply.
- Investors are moving towards consumer staples and healthcare.
Explained simply
Technology investment trusts pool investors’ money to buy shares in technology companies, including businesses involved in artificial intelligence. Their value can rise or fall with the companies they hold, and investors can also trade trust shares on the London Stock Exchange.
SoftBank is a major Japanese technology investor whose results can influence views of the wider sector. Its investments include data centre projects, which provide the computing capacity used by AI services; write-downs reduce the recorded value of investments when expected returns or values change.
Technology shares can be sensitive to interest rates because higher rates and bond yields can make future profits less attractive to investors. Consumer staples and healthcare companies are often seen as more defensive, so money moving towards them can put further pressure on technology trusts.
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