JAMES Anderson, co-manager of the £5 billion Scottish Mortgage Investment Trust, has declared he is getting “more and more pessimistic” about the UK’s ability to create companies of truly global scale.

 

Mr Anderson cited a “lack of economic seriousness” from government, the Brexit situation, and the culture of the City as key factors limiting the UK’s ability in this regard.

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On the issue of the international trust’s UK exposure, Mr Anderson said: “It is a continuation of not finding much to do – we are certainly not increasing our optimism we are going to find a great deal of companies in Britain [to invest in]. We continue to look at the unquoted [sector] as we do elsewhere. I think we are far from seeing these are enough to rebalance the British economy.”

 

Scottish Mortgage had only 4.4 per cent of its total assets invested in the UK at March 31, down from 8.6 per cent a year earlier.

 

Semiconductor and software design group ARM Holdings has been among Scottish Mortgage’s successful investments on the UK stock market. ARM was acquired last year by Softbank of Japan. Mr Anderson highlighted his wish that the board and management of the UK technology company had continued to develop it as an independent business, rather than agreeing a takeover, although he also noted some shareholders had a “short-term” stance.

 

Flight search engine pioneer Skyscanner, based in Edinburgh, has been among Scottish Mortgage’s successes in the unquoted company sector. Skyscanner agreed late last year to be acquired by Chinese travel giant Ctrip. Scottish Mortgage remains a shareholder in Ctrip, which it held before the Skyscanner deal.

 

Mr Anderson, in a UK context, took issue with the “Brexit argument” that benefits from the devaluation of sterling in the wake of last June’s vote to leave the European Union would make up for loss of “industrial muscle”.

 

He said: “I can’t see that a major industrial company will put all their production capacity into Britain, where there are worries about the supply chain and access to markets. I am not sure there is much intellectual evidence that devaluation is a way out of anywhere.”

 

Mr Anderson flagged the lack of progress by the UK on the Brexit front in the year since the vote.

 

He said: “I don’t think really much has happened. We are [about] a year on. Are we any clearer? No.”

 

Mr Anderson said financial markets were “very bad” at handling the “quintessentially long-term effects” of Brexit, declaring: “If we are talking about this as a 20-year phenomenon, it is a grinding lower of economic growth rates over longer periods.”

 

Flagging his belief that this month's UK General Election result had not changed the Brexit outlook, he added: “I think the fundamental sadness is that you don’t…[have] a resistance that would change the effect of that.”

 

Mr Anderson hammered home his view that big technology companies around the globe were “actually changing the world very rapidly”.

 

Scottish Mortgage has big stakes in internet-based companies including major Chinese groups Tencent Holdings, Alibaba Group, and Baidu.

 

US-based online retail giant Amazon was Scottish Mortgage’s biggest holding at March 31. Scottish Mortgage’s £510 million stake in Amazon accounted for 9.5 per cent of the trust’s total assets.

 

Mr Anderson criticised politicians for not making people aware of the “extraordinary transformations” of economies that were going to be happening on the back of technological advances.

 

He said: “I think that will only accelerate…Whether it be the Chinese or whether it be the Americans, these internet-driven platforms have continued to grow exponentially.”

 

Mr Anderson also highlighted the impending impact of “electric vehicles and autonomous driving” on economies around the world.

 

He also flagged his view that the healthcare sector was moving closer to “real change”, with genomics and gene sequencing altering the approach to cancer.