Ashmore expects emerging markets boost from Covid vaccines

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Ashmore updates

Ashmore, the asset manager, expected the recovery in emerging markets to gather pace as vaccination levels there caught up with the west, as it reported an almost 30 per cent jump in full-year profit.

The London-listed investment house, which suffered a difficult year in 2020 when the pandemic battered emerging markets, said pre-tax profit for the year to June 30 was up 28 per cent to £282.5m.

But the company slightly missed analysts’ expectations for adjusted earnings before interest, taxes, depreciation and amortisation and net management fees. Its share price fell by more than 5 per cent to 374.8p on Friday morning.

Tom Shippey, chief financial officer, said the results suggested “things were heading in the right direction” for Ashmore. He added that the outlook for 2022 was good on the back of strong investment performance over the past year and likely stronger growth in emerging markets over the next 12 months.

While there have been strict lockdowns in countries including Vietnam that have hindered economic growth, he said Ashmore was expecting to grow its business as vaccination levels in emerging markets caught up with the west.

“Emerging markets are in pretty good shape,” he said. “Vaccinations are being rolled out, and there is an expectation this will increase in the next nine months . . . That has to be positive for emerging market growth to recover.”

Mark Coombs, chief executive, added that central banks in emerging market countries were acting to contain inflation.

“This environment provides attractive opportunities for investors to increase allocations with heavily discounted equity valuations in emerging markets and high real yields compared with the negative rates in developed markets,” he said.

Ashmore, which reported a 13 per cent rise in assets under management to $94.4bn driven largely by investment performance, is planning to grow its equities offering as well as increasingly target retail investors. Its equities assets under management increased by 61 per cent year on year to $7.4bn.

The company said 96 per cent of assets under management outperformed benchmarks over one year, up from just 9 per cent a year ago. Some 57 per cent outperformed over three years and 79 per cent over five years.

But some analysts struck a cautious note about the performance numbers. “We continue to like the Ashmore business on a medium to long-term basis, but still consider the current investment performance a meaningful risk to the shorter term outlook,” said David McCann, an analysts at Numis.

Shippey said: “We are very pleased for the performance we have delivered to clients over the last 12-18 months. The medium term has improved substantially,” he said. “And we believe we have investment performance numbers we can market to clients.”

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