Slowing US economic growth and a less aggressive tone from the Federal Reserve could engineer a change in fortunes for emerging markets (EM) this year, says Ashmore (ASHM) chief financial officer Tom Shippey. More bullish sentiment towards developed markets and the ongoing US/China trade spat detracted from emerging markets during the latter half of 2018, and while the EM specialist may have gained $2.4bn (£1.88bn) in net inflows, that was below the $7.9bn attracted during the first half of FY2018.
Together with just $100m in performance gains, that nudged assets under management up by 4 per cent during the six-month period, or 10 per cent annually. Lower performance fees and the loss of almost £10m from the marking-to-market of the asset manager’s seed capital investments meant pre-tax profits were slightly below market consensus expectations. However, after stripping out the latter, adjusted operating profits were 9 per cent higher at £96.2m.
Corporate debt led the way in terms of attracting inflows, gaining a net $900m, with management pointing to an improvement in the high-yield default rate and falling corporate leverage. Despite the relative strength of the US dollar, local currency debt also attracted $400m in net inflows. Equity strategies – an area Ashmore is seeking to increasingly diversify into – managed $100m in net inflows despite macroeconomic tumult in markets including Argentina and Turkey. The MSCI Emerging Market Index declined by almost 10 per cent during the period, reflected in $200m in performance losses for Ashmore’s equity strategy.
Chief executive Mark Coombes also announced plans to sell-down part of his 39 per cent holding in the group, at 4 per cent annually over the medium-term, to reduce his stake to a “more appropriate level”.
Analysts at Numis expect adjusted pre-tax profits of £206m for the year to June 2019, giving EPS of 23.1p (from £191m and 21.3p in 2018).
ASHMORE (ASHM) | ||||
ORD PRICE: | 387.4p | MARKET VALUE: | £2.76bn | |
TOUCH: | 387-2-388.2p | 12-MONTH HIGH: | 431p | LOW: 335p |
DIVIDEND YIELD: | 4.3% | PE RATIO: | 18 | |
NET ASSET VALUE: | 108p | NET CASH: | £425m |
Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2017 | 134 | 99 | 12.0 | 4.55 |
2018 | 152 | 93 | 10.8 | 4.55 |
% change | +13 | -6 | -10 | - |
Ex-div: | 7 Mar | |||
Payment: | 4 Apr |