Ashmore Group second half earnings hit by emerging market concerns

24th Feb 2015 10:05

Diminishing investor sentiment toward emerging markets resulted in a 15% drop in assets for specialist money manager Ashmore Group in the second half of 2014.Concerns about the timing of the first interest rate hike by the US Federal Reserve and the sharp drop in oil prices in the last quarter of 2014 combined to reduce investor appetite for emerging markets assets, according to the group."This has had the effect of weakening sentiment towards emerging markets and leading to widespread weakness in asset prices," said chief executive Mark Coombs in a statement.As a result, the group saw assets sink by 15% or $11.3bn to $63.7bn in the six months through to December 2014 from $75bn at the end of June 2014 as it booked a negative investment performance of $6.2bn and saw net outflows of $4.5bn.At the same time, net management fees fell by 11% to £133m compared to £149.8m in the first half following an 8% decline in average assets under management (AUM).However, net revenues rose by 22% to £164m from £134.6m in the first half of the year, thanks to a stronger US dollar and higher performance fees, pushed up pre-tax profit for the second half by 37% to £110.7m. The U.S. boosted added a favourable £21.4m currency swing for the group while higher performance fees were in at £7m."We view these results as reassuring given the volatile backdrop for emerging market securities over the period," said analysts at Goldman Sachs who maintain a neutral rating on the stock.The broker added that after stripping out one-off gains, pre-tax profits were 6% ahead of its forecasts and 10% ahead of company consensus.