Ashmore assets decline again on weak emerging markets, outflows

LONDON (Reuters) -Investment group Ashmore said on Monday that weakness in emerging markets over the last three months of 2021 led to a further decline in assets.

Ashmore said assets under management fell $4 billion over the quarter to $87.3 billion, following a $2.2 billion net outflow and a $1.8 billion fall due to poor investment performance. The group’s assets also fell $3.1 billion in the previous quarter.

Its shares dropped nearly 3% in early trade to as low as 281.2 pence, their lowest level since Dec. 10.

“Persistent global inflation expectations, new COVID-19 variants and weaker growth in China meant challenging market conditions for emerging markets continued through the final months of 2021,” said Mark Coombs, chief executive of Ashmore.

“However, the global macro economic environment is expected to be more supportive for emerging markets in 2022.”

External debt, equities and alternative themes saw net inflows, Ashmore said in its statement, though blended debt, local currency and corporate debt suffered outflows.

Emerging market stocks and key fixed income benchmarks across developing economies delivered negative returns in 2021 as a strong dollar, high inflation, rising global yields and slowing growth took their toll.

JPMorgan analysts said Ashmore’s investment performance remained mixed, staying below benchmarks over a three-year horizon except for equities.

“Management believes the global macro-economic (backdrop) is expected to be more supportive for Emerging Markets in 2022, and can allow EM to attract capital as investors address their underweight allocations,” JPMorgan’s Gurjit S Kambo wrote in a note to clients.

“We believe that whilst valuations in EM are not demanding, near term sentiment may remain cautious on the asset class.”

Ashmore shares fell by a third in 2021 and are down nearly 3% since the start of the year.

(Reporting by Iain Withers and Karin Strohecker; Editing by Rachel Armstrong and Emelia Sithole-Matarise)