Ashmore Shares Fall as Profit Drops on Emerging-Market Woes

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Ashmore Group Plc declined the most in about seven weeks after the U.K. asset manager reported an 8 percent drop in full-year profit because of volatility in emerging markets.

The shares fell as much as 4.2 percent in London. Pretax profit for the 12 months through June fell to 167.5 million pounds ($224 million) from 181.3 million pounds a year earlier, Ashmore said in a statement on Tuesday. Net revenue fell 18 percent to 232.5 million pounds primarily because of a drop of more than a fifth in management fees.

The emerging markets-focused money manager suffered outflows as a weaker Chinese currency, falling commodity prices and uncertainty about global growth prospects hurt sentiment in the first half of its fiscal year. The asset manager said the situation improved in 2016.

“Given Ashmore’s valuation, share-price performance and an outlook statement that appears to indicate that net flows are not accelerating, the shares are overvalued and may register disappointment,” said Peter Lenardos, an analyst at RBC Capital Markets in London with an underperform rating on the stock.

Ashmore was down 3.8 percent at 341.50 pence at 9:02 a.m. The shares have gained 34 percent this year, increasing the company’s market value to 2.4 billion pounds.

Ashmore reiterated that its assets under management amounted to $52.6 billion at the end of June, compared with $58.9 billion a year earlier. The firm added $1.2 billion in investment performance, but net outflows of $7.5 billion during the year led to the decline in assets under management.

“The ongoing challenges in the developed world, such as high indebtedness, political risk and reluctance to reform, are seemingly not priced in, and therefore provide a clear incentive for investors to shift or increase allocations to emerging markets,” Chief Executive Officer Mark Coombs said in the statement.

The company plans to pay a final dividend of 12.1 pence per share.

(Updates to add analyst’s comment in fourth paragraph.)
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