Ashmore’s assets hemorrhage $3.1bn as China woes rock the EM specialist

Investment group Ashmore loses $3.1bn of assets in three months as China woes rock the British emerging markets specialist

  • Large institutional clients pull $1bn from Ashmore Group amid volatile markets
  • An uncertain growth outlook and rising inflation have made investors cautious 

Asset management firm Ashmore Group has seen its assets under management plummet by £3.1billion in just three months as large investors pulled their cash from the emerging markets specialist.

The London-listed firm told investors its assets under management had fallen from $94.4billion to $91.3billion in the three months to the end of September, with its investment funds having been impacted by volatile market conditions.

Investors have become increasingly cautious in recent months, particularly with regard to emerging markets, amid a less certain global economic recovery, inflation and China’s disruptive reform programme.

Ashmore’s exposure to embattled property developer Evergrande has previously sparked concerns 

The group said: ‘Market sentiment, prompted by the macro environment, deteriorated as the quarter progressed, and the consequent reduction in investor risk appetite in September meant that returns were negative for the period overall.

‘While certain…strategies underperformed, as is typical in such a market environment, equity and investment grade strategies outperformed.’

Notably, the asset manager saw an 8.8 per cent decline in the value of its corporate debt assets.

Researchers at Morningstar said in late September that Ashmore retained significant holdings in debt issued by embattled property giant China Evergrande Group.

It followed warnings from Credit Suisse a month earlier that Ashmore’s exposure to Chinese debt was dragging down its returns.

Investment losses account for around $2.1billion of the firm’s asset decline, while £1billion was withdrawn, primarily from ‘a small number of large institutional’ clients.

Ashmore’s shares dropped more than 2 per cent in early trading to 316.4 pence – its lowest level since the pandemic market rout in spring 2020 – but returned to par by midday.

The firm’s share price remains down 26 per cent year to date.

But CEO Mark Coombs remains positive on the firm’s outlook.

He said: ‘Vaccination rates are increasing and restrictions are easing across a wide range of emerging markets, delivering a pickup in leading indicators and a broadening of economic growth.

‘Further, central banks in emerging countries are raising interest rates, reinforcing the attractive yields available.

‘This positive fundamental backdrop is not reflected in current valuations, presenting an opportunity for Ashmore’s active investment processes to exploit and enabling investors to benefit from increasing their allocations to emerging markets.’