Ashmore has warned that a US growth slowdown and the country’s “confrontational trade policy” pose the biggest risk to the global economy following a strong year for the emerging market specialist.
The FTSE 250 group said the “aggressive US trade stance has created uncertainty and is beginning to affect growth, both domestically and in its partners such as China and Europe”.
It added: “While the diversity of emerging markets means there will be winners and losers under any given macro scenario, a continued US-led trade war is likely to affect sentiment broadly and result in further episodes of investor risk aversion.”
The comments came as Ashmore reported pre-tax profits of £219.9m in the year to June 30, ahead of expectations of £213.3m, based on a consensus of 12 analysts’ forecasts provided by Bloomberg. This was also up 15 per cent year-on-year.
It ended the period with assets of $91.8bn, up 24 per cent year-on-year, which it had previously disclosed. This was down to inflows of $10.7bn, less than the record inflows of $16.9bn a year earlier, as well as positive investment performance of $6.9bn.
Ashmore had “delivered strong results for the year”, said Mark Coombs, chief executive, but he also stressed the negative ramifications of the US-China trade war and possible US economic slowdown.
The picture has been mixed for emerging markets for much of the year. The Federal Reserve turned dovish and signalled it will refrain from raising interest rates for the rest of the year. Lower US interest rates traditionally benefit emerging markets as global investors hunt for better returns elsewhere.
However the Fed’s dovish shift has taken place against a background of slowing growth and the US-China trade war.
Across emerging markets as a whole, the IMF forecast last month that gross domestic product growth would slow to a post-global financial crisis low of 4.1 per cent this year, in a significant cut to its forecasts.
Economic growth in China fell to a near three-decade low of 6.2 per cent in the second quarter while Indian GDP growth ground to a six-year low of 5 per cent in the same period.
Mr Coombs, who said he has a 37.8 per cent shareholding in the group, reiterated his intention of reducing that “to a more appropriate level over the medium term” by selling up to 4 per cent of Ashmore stock each year.
He originally made the pledge in February following a warning from a proxy adviser that shareholders were at risk of his gaining “creeping control” due to Ashmore’s share buyback programme, which would mean his share of Ashmore could rise.
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