Ashmore profit rises on emerging markets strength

Despite reporting pre-tax profits of £206 million, 23% up on the prior year and well ahead of consensus forecast of £198 million on net inflows of $1.9 billion (£1.4 billion), shares in the business were 5.9% or 21p lower at 343.5p by 10am, having fallen nearly 10% at the market open.

After a long period of underperformance on concerns about the economic outlook, many emerging markets have posted double-digit returns over the previous year as sentiment improved, prompting Ashmore's stock to outperform developed market peers.

The FTSE 250 group this morning reported an 11% increase in revenues in the year to the end of June, with pre-tax profits rising to £206.2m - around £6m ahead of analysts' expectations.

Assets under management during the period rose 12 percent to $58.7 billion after net inflows of $1.9 billion and market gains of $4.2 billion, it said in a statement, mirroring half-year gains seen by peers including Jupiter (JUP.L) over the summer. Performance fees, charged for outperformance, were 28.3 million pounds, it said, up from 10.4 million a year earlier.

Ashmore shares fell 5.2% to 343.5p in the first hours of trading on Thursday.

Adding to the subdued tone, UBS analyst Michael Werner also pointed to lower-than-expected management fees of 221.6 million pounds, after the fee margin dipped to 50 basis points in the second half of the year.

The emerging markets specialist said recent weakness in EM asset prices was primarily the result of investor behaviour and capital flows moving to developed markets that were being supported by quantitative easing rather than deterioration in the underlying fundamentals.

The margin was pressured after the company won investment mandates from institutional clients at lower fee levels.

"The performance of emerging markets assets over the past year has been strong".

Mark Coombs, chief executive officer at Ashmore, said the asset manager's business model "is delivering as expected".

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