Ashmore share price plummets after Iran War leaves investors sitting on their hands
Emerging market specialist Ashmore Group suffered a sharp drop in its share price during early morning trading, after the Middle East conflict brought earlier growth to a grounding halt and caused investors to “sit on their hands”.
Shares tumbled 5.6 per cent in early trading to 209.4p, after the group reported a three per cent decline in assets under management to $50.7bn (£37.3bn), down from $52.5bn the prior quarter.
This was driven by a $0.9bn reduction in the value of assets managed, coupled with $0.9bn in net outflows.
Ashmore blamed the outflows on the interruption of the steady macroeconomic environment and capital flows caused by the Middle Eastern conflict, resulting in “heightened global market volatility” and investors opting for a ‘wait and see’ approach.
Tip to outflows
Subscription activity remained “healthy”, with local currency AUM jumping 4.4 per cent to $16.4bn, while equities AUM stayed broadly flat at $8.8bn.
But growth was severed after an institutional investor pulled money from its blended debt fund, causing AUM to fall from $12.5bn to $10.5bn
External debt also suffered outflows, leaving AUM to fall from $8.4bn to $8.0bn.
Outlook
Ross Luckman, research analyst at Panmure Liberum, said: “As witnessed elsewhere in the sector, after a good January and February, March proved rather more difficult. Markets weakened and clients, inevitably, chose to sit on their hands at best or redeem at the margin.
“Had that been the only issue, we believe that Ashmore might still have reported a small net inflow in the quarter but, for reasons unrelated to wars or performance, a specific institutional redemption pushed the quarter into outflows.”
The group does not expect conditions to widely improve in the near term, anticipating global investors to take a “measured stance” until clarity over the end of the conflict and what it means for inflation, interest rates and commodity prices is granted.
But global stock markets rose on Thursday morning, as both Iran and the US prepare to return to the negotiation table and US President Donald Trump claiming the war is nearly over.