Aberdeen Asset Management Plc said it may top up its equity holdings as a fresh wave of selling pummeled global markets.
Hugh Young, who oversees the U.K. firm’s global equity, property and fixed-income assets from Singapore, said lower valuations had prompted fund managers with excess cash to consider buying shares rather than sell them. Aberdeen oversees about 307.3 billion pounds ($485 billion) of assets, including more than a quarter in emerging markets.
“We are not moving to cash within our portfolios,” said Young in a telephone interview on Monday. “People will say this is unprecedented volatility and are remarkably gobsmacked but it all seems familiar. Having been looking after the same funds through the 1987 crash and the Asia crisis, this is comparatively small.”
U.S. stocks plunged and Germany headed for a bear market on Monday, extending losses of more than $5 trillion for global equities since China unexpectedly devalued the yuan on Aug. 11. The selloff is being fueled by concern that the slowdown in the world’s second-largest economy will be worse than anticipated and hurt the outlook for global growth.
A selloff in June saw client redemptions accelerate at Aberdeen, which reported $15.5 billion of outflows last month. Hedge fund managers including Odey Asset Management LLP have been shorting its shares, which have slumped 31 percent this year.
“Panic spreads,” said Young. “You will have some asset allocators saying we have to sell everything, but logically we should be getting more excited as things get cheaper.”
Young said the companies that Aberdeen invests in, which include U.K. banks Standard Chartered Plc and HSBC Holdings Plc, are not suddenly unprofitable. Central bank policies to pump money into the system, known as quantitative easing, had inflated asset prices rather than bolstered the real economy, he said.
“Maybe the markets just need a tipping point to expose the fragility of QE,” said Young. “It’s too late for the West to scroll back and reverse the damage done from QE. We now just have to sit back, take the pain and make sure our companies are doing all the right things.”
Aberdeen paced a selloff in U.K. asset managers on Monday, falling 5 percent to 297.9 pence by 2:42 p.m. in London. Schroders Plc slumped 5.9 percent, Henderson Group Plc tumbled 9 percent while Jupiter Fund Management Plc lost 6.7 percent.