Ashmore Group Declines as Investors Flee Emerging Markets
Ashmore Group Plc (ASHM) fell the most in six weeks London trading after reporting $2.9 billion of net outflows as investors fleed emerging markets.
Pretax profit slumped 34 percent to 79.5 million pounds ($133 million) in the six months to Dec. 31 from a year earlier after a 9 percent appreciation in the pound devalued dollar-dominated assets, the London-based fund manager said in a statement today. Assets under management fell 2.7 percent to $75.3 billion in the second half of 2013.
The results “miss our expectations by a wide margin” wrote Peter Lenardos, a London-based analyst at RBC Europe Ltd. in a note to clients with the equivalent of a sell rating on the stock. “Our full year consensus estimates appear too optimistic, meaning we expect material downward adjustments to consensus forecasts.”
The shares dropped 6.5 percent to 317.8 pence in London, marking its sharpest decline since Jan 14. Ashmore and larger competitor Aberdeen Asset Management Plc (ADN), which invests about two-thirds of its assets in global emerging markets, have tumbled this year as reduced stimulus from the U.S. Federal Reserve tempered demand for riskier assets.
Clients redeemed $10.2 billion, or 13 percent of the company’s average assets, in Ashmore’s fiscal first half because of withdrawals in some fixed-income and currency investments, according to the statement.
“Some of the flightier capital has come out of the market,” newly appointed group Finance Director Tom Shippey said in a telephone interview. “Our strategy is to raise capital, to invest and source capital from emerging markets. That remains the same and is unimpacted by” U.S. monetary policy.
Shippey said 95 percent of its assets under management outperformed benchmarks on a three-year basis, which he said was vital for raising longer-term institutional capital. About 38 percent of assets outperformed over one year compared with 96 percent as at June 2013.
Ashmore still increased its interim dividend to 4.45 pence a share, from 4.35 pence in the year earlier, and said its payout policy remains “progressive.”
The company remains open to building up its existing businesses in emerging economies through “bolt-on” acquisitions, Shippey said. Ashmore also won a provisional license to operate Saudi Arabia as it seeks to raise capital from investors in the Middle East, it said.
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