Baillie Gifford has warned of the mounting risks to foreign investors in China after a punishing year for the fund manager’s Scottish Mortgage Investment Trust as its bold bets on the country’s growth companies and the global tech sector suffered.

Tom Slater, manager of the ￡14.4bn Scottish Mortgage trust, which last year added to its Chinese holdings, said the war in Ukraine has worsened US-China relations and that foreign investors needed to reckon with limits Beijing may impose on their investment gains.

“The challenge now for western investors is twofold: incorporating the low but increased chances of future US sanctions into their evaluation of Chinese investments and considering how the Chinese state may limit the upside in stock prices for the breakthrough winners,” he said.