A reassuring trading update from Ashmore (ASHM) has prompted a 7.3% bump in the share price to 377p. The update, even if not brimming with optimism, was sufficient to prompt a relief rally in the beaten-down counter – as forecast by Shares last month.
The £2.5 billion cap emerging markets debt specialist has tanked since Federal Reserve chairman Ben Bernanke first hinted he would begin tapering quantitative easing (QE) in a speech to Congress (22 May). The resulting flight from risk prompted a sell-off in emerging market bonds.
Weakness turned into a rout when Bernanke stood up at the press conference concluding last week’s Federal Open Market Committee (FOMC) meeting (18-19 Jun) and confirmed QE – currently running at $85 billion a month – might end next year. Ashmore was down 9.1% on the day.
The sell-off, however, has transpired to be an over-reaction as the firm’s large exposure to relatively safer US dollar-denominated emerging market debt, and the growing roster of South East Asian central bank investors holding its local currency bond funds, have kept redemptions in check.
Assets under management remained largely unchanged during the quarter as net inflows were offset by negative investment performance. Local currency and corporate debt received the highest inflows with the former benefiting from strong demand from Government related clients.
That flows remained positive is an endorsement of Ashmore’s focus on clients who wish to hold bond portfolios for the long term through good times and bad.
Ashmore will report full-year results on 10 September.