12th Jul 2024 11:24
(Alliance News) - Ashmore Group PLC reported a decline in assets under management over the second-quarter, with "subdued" risk appetite likely to persist until major central banks begin cutting rates.
Ashmore shares fell 1.3% to 177.70 pence each in London on Friday morning.
Ashmore said assets under management declined 4.6% to USD49.5 billion as at June 30 from USD51.9 billion from March 31.
"Emerging markets returns have been positive over the past year and Ashmore has delivered outperformance across a broad range of strategies, but in contrast to this point in previous cycles, investor risk appetite remains subdued and institutional decisions to reduce emerging markets exposure continue to drive net outflows," Ashmore said.
It added: "This trend was notable in the blended debt theme this quarter, which, combined with small net outflows from corporate debt and equities, exceeded the net inflows into the local currency and external debt themes."
Ashmore will release its half-year results on September 5.
UBS noted Ashmore's assets under management were its lowest since December 2015, and second-quarter outflows of USD2.0 billion were worse than consensus of USD1.5 billion.
UBS analysts added: "Ashmore's AUMs missed our expectations by 2%. As the Q4:24 flow environment was worse than expected and expecting further flow weakness in the coming quarters (especially around the uncertainty of the US election), we increased out outflow outflook for FY25 to USD3.3 billion, from USD1.8 billion. We expect inflows in 2026 (USD1.4 billion, down from our previous forecast of USD2.0 billion)."
As a result, UBS cut its 2025 and 2026 earnings per share estimates for Ashmore by 6% and 8%.
It rates Ashmore at 'neutral' with a 180p price target, cut from 190p.
Peel Hunt rates it at 'buy' and noted it will review earnings estimates "later".
"With AUM trends remaining negative, there is little to suggest that earnings momentum could reverse for the following year," it added.
Liberum believes Ashmore may continue grappling with outflows for a little longer.
"Performance remains fine, but 'investor risk appetite remains subdued'. The start of rate cuts will be key to turning the flow performance," it explained.
Liberum also has a 'buy' on the stock.
By Eric Cunha, Alliance News news editor
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