Aberdeen Asset Management Plc saw client redemptions accelerate in the three months through June as the market rout in China soured investor appetite for Asia and emerging market equities. The shares slumped.
The Scottish firm, which invests more than a quarter of its funds in developing economies, was hit by 9.9 billion pounds ($15.5 billion) of net outflows in the period, almost equal to the 11.3 billion pounds of redemptions in the previous six months.
“It’s not good fun sitting here and watching money going out of the funds because emerging markets are out of style,” Chief Executive Officer Martin Gilbert said in an interview. “It’s been very tough for us, but we are passionate about the way we manage money and we are not going to change that,” he said, adding that a rout in China “hasn’t helped.”
While Aberdeen has been underweight Chinese equities, a general selloff in financial markets and currency movements saw assets under management fall 23.3 billion pounds from the end of March to 307.3 billion pounds.
A selloff in Chinese equities during June and early July wiped out $4 trillion in value off the Shanghai Composite Index. It has rebounded 18 percent since July 8 after officials announced measures including banning major shareholders from selling stakes.
Aberdeen’s shares dropped as much as 8.4 percent, the biggest loss since October 2008. They closed down 7.6 percent to 369.10 pence in London, erasing more than 400 million pounds from the firm’s market value.
The outflows were more than double the 4.7 billion pounds forecast by RBC Capital Markets analyst Peter Lenardos.
“The pace of outflows is accelerating,” Lenardos said in a report. “We believe that consensus forecasts will likely be subject to further downgrades.”
Aberdeen, which this month named Devan Kaloo as head of global equities, joins smaller competitor Ashmore Group Plc in suffering redemptions as investors bought assets considered less risky when U.S. monetary stimulus is reduced. Ashmore’s assets shrunk $2.2 billion in the same quarter to $58.9 billion.
“It’s not just necessarily China, but there is a feeling that a rise in interest rates will not be great for emerging markets,” Gilbert said. “I tend to think the sooner rates go up in the U.S. and put us out of our misery the better.”