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Numis upgrades Ashmore to ‘hold’ after better-than-expected assets under management and net inflows

Numis says they consider Ashmore a long-term sector holding but still see potential headwinds: ongoing revenue margin pressures and uncertainty of future flows

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The Emerging markets investment manager had higher-than-expected net inflows of US$6.4bn in the third quarter

Ashmore group PLC (LON:ASHM) has been upgraded by Numis following stronger-than-expected assets under management (AuM) and net inflows in the third quarter.
Numis raised its rating on the stock to ‘hold’ from ‘reduce’ and lifted its target price to 385p from 365p.

“We consider Ashmore a core long term sector holding (due to long term structural growth expected in emerging markets AuM), however, we also note a number of short to medium term headwinds: ongoing revenue margin pressures and the uncertain direction of future flows (over and above the $5bn+ per annum already factored in to consensus in future periods),” the broker said.

READ: Ashmore shares jump as it reports 10% growth in third quarter assets

The emerging markets-focused asset manager said total assets in the three months to the end of March stood at US$76.5bn, compared to US$69.5bn at the end of December, on the back of its strongest quarter of net inflows since June 2013.

Net inflows came to US$6.4bn on the back of continued demand for emerging market assets.

Net inflows higher than estimated

Numis said net inflows were well above its US$1.8bn estimate and assets were 6% higher than its US$72.2bn forecast.

“Flows appeared to be particularly strong in Local, Blended and Corporate debt, but were positive in most categories,” it said.

Numis added: “Reflecting the recent share price weakness, coupled with our target price updated for this AuM beat, we upgrade our recommendation from reduce to hold.”

The broker also raised its earnings per share guidance for 2019 by 3%.

Shares rose 6.6% to 422p in morning trading.

Quick facts: Ashmore Group

Price: 492 GBX

LSE:ASHM
Market: LSE
Market Cap: £3.51 billion
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