Ashmore Group plc (ASHM) Ord 0.01
HL comment (14 October 2014)
The Chief Executive noted that "The decline in AuM over the quarter reflects predominantly the correction in markets towards the end of the period, driven by US dollar strength." The group highlighted that bonds across all fixed income themes performed relatively well but a stronger US dollar affected local currency returns, and therefore investment performance was weakest in local currency and blended debt.
The Chief Executive went on to note that "Against this backdrop, the fundamentals in emerging markets continue to be supportive and many of the market uncertainties of the past year are being resolved." The company highlighted a near completion of the electoral cycle - geopolitical risk is evident but isolated - the US Treasury market has reacted in a measured way to the increasing prospect of higher short term rates. The Chief Executive concluded that "This provides a firm footing for Ashmore's investment processes to take on risk and to deliver long-term investment performance for clients." In all, analyst consensus opinion points towards a hold.
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- Assets under management of US$71.3 billion were US$3.7 billion lower than at 30 June 2014.
- Investment performance reflects market weakness towards the end of the quarter.
- Assets under management declined. A fall of US$3.7 billion during the quarter and compared to the end of the last quarter was reported. Assets under management fell during the last full financial year from US$77.4 billion to $75 billion.
- Exchange rate movements can work against the company Full year profits for the year ending 30th June 2014 were impacted by effects of foreign exchange translation ( £46 million) and lower performance fees (£30.1 million), a consequence of a market sell-off in May and ongoing volatility throughout the year.
- In the course of its normal activities, the company has exposure to credit risk.
- The Chief Executive noted that "Against this backdrop, the fundamentals in emerging markets continue to be supportive and many of the market uncertainties of the past year are being resolved." The company highlighted a near completion of the electoral cycle - geopolitical risk is evident but isolated - the US Treasury market has reacted in a measured way to the increasing prospect of higher short term rates. The Chief Executive concluded that "This provides a firm footing for Ashmore's investment processes to take on risk and to deliver long-term investment performance for clients."
- The Board intends to pay a progressive dividend over time, taking into consideration factors such as prospects for the Group's earnings, demands on the Group's financial resources, and the markets in which the Group operates.
- Exchange rate movements can work to the company's favour.
- The London based fund manager is a recognised leader in the management of emerging market debt.
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