- Net outflows slow
- Fed rate stance lifts emerging markets
Emerging markets have been a blank space for most of the past three years as a strong dollar and a crashing property market in China left specialist asset managers such as Ashmore (ASHM) with little to cheer. It was therefore with a certain relief that the company's latest trading update showed a marked slowdown in the net outflows, in a possible sign that investors are showing more interest in emerging market assets after the Federal Reserve signalled an end to rate hikes.
Net outflows for the second quarter were markedly lower at $1.6bn (£1.27bn), while an improved investment performance of $3.9bn meant the company’s overall assets under management (AUM) increased by 4 per cent to $54bn for the quarter ending 31 December. While there was still risk aversion among some investors, management noted that equities enjoyed net inflows, while fixed income saw steady outflows but not affecting any particular theme.
The company’s performance was underpinned by an improvement in its underlying indices – fixed income and equities indices were up by 6 per cent and 9 per cent for the quarter, respectively. Management also expects investors to start to change their portfolio allocation as the year progresses and interest rate expectations encourage a move out of dollar assets to generate better returns.
Broker Peel Hunt said that improving asset values would support a modest upgrade in forecasts for the manager. The broker currently expects earnings per share (EPS) of 11.7p for this year, giving a current price/earnings ratio of 18.9. The shares have enjoyed a strong recent run, with an increase of 25 per cent over the past few months, but the question of China’s economic direction will still dominate the debate.
Last IC view: Hold, 196p, 06 Sep 2023
