Ashmore results reflect negative sentiment towards emerging markets

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Ashmore results reflect negative sentiment towards emerging markets

Emerging market specialist Ashmore Group's financial performance in the second half of last year was impacted by the market environment as the firm suffered heavy outflows.

Net outflows in the six months to 31 December reached $3.2bn while Ashmore also saw negative investment performance of $3.9bn. Assets under management now stand at $87.3bn.

Seed capital investments generated gains of £25.2mn, down from £49.3m the previous year, while profit before tax also dropped by nearly a quarter to £116m.

Despite poor performance in 2021, going forward market conditions are expected to take a turn for the better, with the macro environment likely to provide more support.

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CEO Mark Coombs said:"These financial results reflect the negative sentiment towards Emerging Markets assets at this point in the cycle.

"Consistent with the approach to previous periods of volatility, Ashmore's active investment processes have exploited market weakness to underpin future performance, and the Group has made continued progress towards its strategic objectives."

"Many of the factors that presented headwinds in 2021 are fading, so the macro environment is expected to be supportive."

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Coombs noted that emerging markets typically outperform during periods of rising interest rates in the US, so "a Fed move should be a significant catalyst".

"Importantly, valuations across equity and fixed income markets do not yet reflect this, with equity markets trading close to relative lows compared with developed markets, and bond yields and spreads are highly attractive relative to history and developed world bonds.

"Therefore the backdrop supports outperformance of Emerging Markets assets and this should cause investors to increase their underweight allocations."