Ashmore predicts rebound in taste for emerging market risk as assets tick £1bn upwards

Emerging markets specialist Ashmore expects investors’ risk appetite to roar back amid slackening Chinese covid restrictions and a rebound in developing economies.

In a trading update, London-listed Ashmore said total assets under management jumped two per cent to $57bn (£47bn) in the final three months of 2022, up from $56bn at the end of the previous quarter.

The firm’s equity holdings kicked up two per cent while its fixed income funds rose three per cent in the period. The firm’s alternative holdings slumped 13 per cent, however.

Mark Coombs, chief executive of Ashmore said risk appetite was returning following a tricky 18 months in which investors had fled emerging markets amid soaring inflation and sharp falls in valuations.

He saidL “Emerging markets’ strong performance over the past three months reflects a positive shift in investor sentiment against a backdrop of light positioning and highly attractive valuations.”

“Some of the headwinds of 2022, such as the Fed’s aggressive policy tightening, are receding, China re-opening its economy will stimulate activity more broadly, and a number of emerging countries are starting to see deflation as a consequence of effective monetary policy action over the past two years.”

Coombs added that the firm was expecting “investor risk appetite” to ramp up over the next 12 months which would bolster a resurgence in market performance and boost capital flows into emerging markets investors.

A rebound in emerging markets helped offset $2.6bn net outflows at the firm as investors continued to pull their cash from funds.

Analysts at Panmure Gordon said Ashmore had topped market estimates despite funds continuing to shed investors’ cash.

“[Assets under management] was ahead of our estimates, which makes a change, and the rate of outflows has lessened a bit more than we might have hoped, and sooner,” Panmure analyst Rae Maile said in a note.

“The company remains resolutely upbeat on the prospects for Emerging Markets, of course, and expects that a recovery in investors’ risk appetite will lead “ultimately” into capital flows.”

The asset bump for Ashmore comes after a tricky period for UK-based money managers who reported tumbling assets in the third quarter, as markets were roiled by soaring inflation and the fall out of Liz Truss’s disastrous mini-budget.

A slew of investors reported huge dents to their holdings, with Schroders reporting a £21bn fall in October, while Liontrust and Jupiter also suffered sharp declines.

Original article here: https://www.cityam.com/ashmore-predicts-rebound-in-taste-for-emerging-market-risk-as-assets-tick-1bn-upwards/

Author: Charlie Conchie, Investment Editor, City AM

Rae Maile

Managing Director, Research Analyst, Financials & Tobacco