- Asset manager’s pre-tax profits plunge 58%
- Annual AuM down 32%
- Sees ‘exceptionally attractive valuations’ in emerging markets
FTSE 250 fund manager Ashmore’s (ASHM) assets under management (AuM) were hit by ‘widespread risk aversion’ in the second half of its financial year to June 2022, leading to a steep drop in annual profits.
Yet shares in the specialist emerging markets asset manager rallied 4.3% to 202.6p after the firm issued a positive outlook underpinned by ‘exceptionally attractive valuations’ across its markets.
In a display of confidence, the London-based company also maintained the year’s total dividend at 16.9p, having declared an unchanged final payout of 12.1p.
MARK-TO-MARKET LOSSES
Annual pre-tax profits more than halved, plunging 58% to £118.4 million, as management fees fell from £276.4 million to £247 million.
‘Second half market weakness resulted in £49.9 million unrealised mark-to-market loss on seed capital investments,’ explained Ashmore.
With Russia’s invasion of Ukraine exacerbating geopolitical and macroeconomic pressures, assets under management fell 32% to US$64.0 billion during the year.
The majority of the move was attributable to the impact of lower market levels, said Ashmore, which also flagged a reduction in risk appetite which hit client flows in the second half.
RISK AVERSION WEIGHS
‘The combination of geopolitical tension, high inflation figures and central banks tightening monetary policy, including the Fed in the second half of the year, with the consequent negative impact on market levels, meant that investor risk appetite was markedly lower as the period developed,’ said Ashmore.
Looking ahead, Ashmore expects inflationary pressures to reduce in the coming quarters despite the ongoing conflict in Ukraine.
EMERGING MARKETS ON SALE
Chief executive Mark Coombs believes current testing market conditions have left valuations across emerging markets at ‘exceptionally attractive levels’ and insists asset prices ‘heavily discount the known risks surrounding inflation, global rates, economic growth and, on probable scenarios, geopolitical issues’.
While the global macro environment ‘still presents some near-term uncertainty’, Coombs says the situation in emerging markets ‘is improving and the breadth of investment opportunity helps to mitigate the risks.
‘Ashmore’s long term investment approach has been proven across many different market cycles and facilitates access to the exceptionally attractive valuations currently available across emerging markets. Risk appetite will improve as some of the recent macro headwinds abate, supporting a recovery in emerging markets asset prices and higher investor allocations.’
