Friday tips round-up: Aberdeen Asset Management, Rio Tinto

17th Jan 2014 10:09

Emerging markets-focused fund manager Aberdeen Asset Management's trading update out on Thursday confirmed investors' reticence to keep pushing money into that asset class - for the time being - in the face of the looming start to tapering by the US Fed. However, the company did not see accelerated outflows of funds during the last quarter of 2013, rather the opposite, they actually decreased by 2bn pounds to 11.2bn pounds. Inflows, nonetheless, also diminished. Even so, when combined with a fall in the value of those funds from changes in exchange rates and some rise in their intrinsic value then assets under management fell by 6.8bn pounds to 193.6bn. Be that as it may, the acquisition of Scottish Widows Investment Partnership (SWIP) should close in the current quarter, helping to re-balance its funds away from emerging markets and helping margins. The firm is also sitting on several hundred millions of pounds worth in net cash, providing plenty of scope for enhanced dividends. All in all the company's update confirms that the tide has indeed turned for emerging markets. Yet just as real tides rise and fall investors' appetite for this class of investments will return. "[But] don't ask me when", says The Times' Tempus, adding that the shares are, "worth looking at for the benefits of that SWIP deal, but probably not until emerging markets jitters have subsided".Investors in iron-ore producer Rio Tinto will be able to breathe a little easier relatively soon, when the company hits its 290m tonne target for its big expansion project at Pilbara. That will diminish the threat of new supply hitting prices in a year when Chinese demand might weaken. However, in the fourth quarter of last year the company shipped two million tonnes more ore than it produced. This, analysts at Societe Generale believe, is the result of improved infrastructure - or logistics. The importance of that lies in that miners of such size as Rio Tinto are in the end giant logistics companies, having to find the most efficient mode of transporting mountains of material. Rio alone has a 25m tonne inventory of iron ore, a testament to the strength of supply, but also something which could weigh on prices - and in turn the firm's free cash-flow. Another year of stable pricing for iron-ore should not be taken for granted, nor does it depend solely on production and consumption, says the Financial Times' Lex column. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB