Fund woe at Ashmore
LONDON based fund group Ashmore saw investors pull money out as poor stock picks led to
a “negative investment performance” of nearly $17 billion this year.
Investors took out another $13.5 billion to place elsewhere.
Funds under management fell by 32% to $64 billion.
That adds to the woes for the wider fund management sector, which has mostly struggled to cope with turbulent markets this year that have seen tech stocks plummet and other seemingly sure bets fall out of bed.
Ashmore, an emerging markets specialist, saw its own profits more than half to £185 million.
That was notably worse than the City expected.
The shares down 51% this year, fell another 2p to 192p today.
Mark Coombs, the billionaire founder of the business and CEO, thinks emerging market shares and other assets are now so cheap that buyers will return.
He said: “While the global macro environment still presents some near-term uncertainty, the situation in Emerging Markets is improving and the breadth of investment opportunity helps to mitigate the risks. Ashmore’s long-term investment approach has been proven across many different market cycles.”
But this year has been characterised by “widespread risk aversion due to Ukraine war, inflation and higher rates globally”.
Ashmore did manage to hold its final dividend at 16.9p a share.
When interest rates rise, investors typically pull money out of stocks since they can earn a reasonable yield from lower risk products such as bonds.
Peel Hunt, the broker, said in a note: “There remains many reasons for longer term optimism, albeit there are still clear shorter-term uncertainties.”
FTSE 100 steadies, housebuilders lower
The FTSE 100 index is 24.94 points higher at 7173.44, having fallen by 1.9% in yesterday’s session.
A strong finish on Wall Street lifted the mood, with Rolls-Royce, Reckitt Benckiser and Shell among the stocks trading more than 1% higher.
But there was no respite for the housebuilding sector as UK recession fears sent Persimmon, Berkeley Group and Barratt Development down by over 2%.
Today’s rise leaves the FTSE 100 down by 2.8% this year. Richard Hunter, head of markets at Interactive Investor, said: “With no immediate end in sight to a raft of economic challenges, the volatility and uncertainty of recent months looks likely to persist.”
The FTSE 250 index lifted 0.5% or 89 points to 18,582.74, led by recoveries of 3% for ASOS and gaming group 888 Holdings.
Alliance Pharma boss faces disqualification after CMA probe
The boss of Alliance Pharma faces disqualification as a director, the company has said, following an investigation by the UK competition regulator.
Peter Butterfield, who has been CEO since 2018, is set to face a Competition Disqualification Order by the Competition and Markets Authority for his involvement in alleged anti-competitive practices in relation to the sale of prescription drug prochlorperazine.
The company said in a statement: “Alliance fundamentally disagrees with the CMA’s actions, both in relation to the findings against the Company and in applying for a CDO against Mr. Butterfield.
“Alliance reiterates that it did not participate in, or profit from, any market sharing arrangement and refutes any involvement by the Company or Mr. Butterfield, who retains the full confidence and support of the Board as CEO.”
Alliance Pharma shares sunk 4.4% this morning.
FTSE 100 steadies after Wall Street recovery
The FTSE 100 index lost 1.9% and the FTSE 250 index fell by 3% as recession fears and lockdowns in the Chinese city of Chengdu prompted a wave of selling yesterday.
CMC Markets expects the FTSE 100 index to open with a modest rise of 33 points to 7181, having seen US markets steady towards the end of Wall Street trading last night.
The Dow Jones Industrial Average finished 0.5% higher as attention turns to this afternoon’s payrolls report, with the US economy expected to have added 300,000 jobs compared with the surprise 528,000 recorded for July.
The last three reports have beaten Wall Street forecasts, with another strong figure set to add another layer to recent US dollar strength.
The pound fell to just below $1.15 yesterday and is in danger of breaching the March 2020 low of $1.146, although this morning’s session saw a recovery to $1.154.
Brent crude stood at $93.76, having lost about 7% at one point this week as the demand outlook is weakened by China lockdowns and rising interest rates. OPEC ministers are due to meet on Monday to discuss their latest production quotas.