Ashmore falls as dollar turnaround fails to stem outflows in 4Q

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By Geoffrey Smith 

AiVIF.com -- Shares in Ashmore (LON:ASHM) fell on Monday after the London-listed emerging market fund specialist said investors continued to withdraw money despite an improvement in performance.

Net outflows in the three months through December narrowed to $2.6 billion, down from around $4B in the previous three months, as the first signs of decline in global inflation, and the consequent weakening of the dollar to the benefit of emerging market currencies, supported risk appetite. 

Ashmore's main markets had profited from the dollar's decline in the fourth quarter, driven in turn by the U.S. Federal Reserve's slow shift away from aggressive rate hikes. The dollar index, which tracks the greenback against a basket of developed market currencies, fell over 9% in the final three months of 2022, greatly easing the burden of servicing dollar-denominated debt for emerging-market borrowers.

As a result, assets under management rose by 2% on the quarter despite the net outflows. AUM in fixed-income, by far the largest of Ashmore's asset classes, rose 3%, but the smaller Alternatives division fell 13%.

Ashmore stock has lost more than half its value since the start of the pandemic three years ago, but has rebounded some 50% from its lows in October last year, as the market looks forward to a change in the U.S. monetary policy cycle and - crucially - the reopening of the Chinese economy that is likely to support growth elsewhere in the emerging world.

"Some of the headwinds of 2022, such as the Fed's aggressive policy tightening, are receding, China re-opening its economy will stimulate activity more broadly, and a number of emerging countries are starting to see deflation as a consequence of effective monetary policy action over the past two years," said Chief Executive Mark Coombs. "Therefore, we expect investor risk appetite to increase over the course of the next 12 months, underpinning further market performance and ultimately leading to capital flows into the Emerging Markets."

Ashmore stock rose initially on the update before reversing to trade down 2.0% by 04:25 ET (09:25 GMT).