FTSE 250: Ashmore profits slump amid emerging markets exodus

·Reporter
·2-min read
Ashmore
Ashmore posted a pre-tax profit of $136m for the year, down from $325m the previous year as assets under management shrank by 32% to $64bn. Photo: Igor Golovniov/SOPA/LightRocket via Getty

Profits at emerging markets fund manager Ashmore (ASHM.L) slumped in the year to June after reporting investors pulled billions out as global markets fell amid economic uncertainty.

Shares in the FTSE 250 (^FTMC) company rose 5.4% on Friday despite saying poor stock picks led to a "negative investment performance" of nearly $17bn (£14.7bn) this year.

Investors also took out an additional $13.5bn to place elsewhere, it added.

According to the London-based group, investors had cut their appetite for risk because of "the combination of geopolitical tension, high inflation and central banks tightening monetary policy", including the Federal Reserve in the second half of the year, with the "consequent negative impact on market levels".

Investors typically pull money out of stocks when interest rates increase as this allows them to earn a reasonable yield from lower risk products such as bonds.

Ashmore posted a pre-tax profit of $136m for the year, down from $325m the previous year as assets under management shrank by 32% to $64bn.

Read more: FTSE 100: Shell shares rise despite reports CEO Ben van Beurden stepping down

However, the emerging markets specialist maintained its final dividend to give a full year payout of 16.9p per share.

The company predicted "risk appetite will improve as some of the recent macro headwinds abate, supporting a recovery in emerging markets asset prices and higher investor allocations".

Chief executive and billionaire founder of the business, Mark Coombs, thinks emerging market shares and other assets are now so cheap that buyers will return.

"While the global macro environment still presents some near-term uncertainty, the situation in Emerging Markets is improving and the breadth of investment opportunity helps to mitigate the risks," Coombs said. "Ashmore’s long-term investment approach has been proven across many different market cycles."

Friday's results come after Ashmore flagged in July that its assets under management plunged to a five-year low.

Watch: How does inflation affect interest rates?