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View the article online at http://citywire.co.uk/wealth-manager/article/a727822

Ashmore remains on sick bed as FTSE recovers

by Chris Marshall on Jan 14, 2014 at 17:50

‘The prospect of another reduction of stimulus at the end of this month, set against rather lofty valuations has seen investors decide to take some money off the table in a week that sees US earnings start to come in thick and fast starting with JP Morgan this afternoon,’ summed up Michael Hewson, chief market analyst at CMC Markets.

Jonathan Sudaria, a dealer at Capital Spreads, had his own take on the weakness in markets so far in 2014: ‘The markets have stalled as no new catalysts have crystallised to keep the bulls going and the double-edged sword of good economic data being bad if it leads to monetary tightening has kept other traders on the sidelines.’

Emerging markets have not experienced the gains that developed markets have enjoyed in recent years, and this was telling in a financial update from London’s biggest FTSE 250 faller on Tuesday. Ashmore (ASHM.L) shares fell 12% to 363p after the emerging markets focused asset manager reported net outflows of $3.5 billion from its funds in the last three months of 2013.

At a time when investors are muling whether to put their money back into emerging markets Ashmore chief executive Mark Coombs pointed to ‘greater clarity over US monetary policy’ that gave him ‘confidence for the year ahead’.

Even so, Ashmore shares are not cheap, reckons Numis analyst David McCann. ‘We view Ashmore as a core long-term holding, but one which we believe offers only fair value today’, he summed up.

Other asset management firms fell in Ashmore’s wake, with Henderson (HGGH.L) down 4.4% and Schroders (SDRt.L) down 2.4%.

House builder Barratt Developments (BDEV.L) failed to find traction among investors, falling 0.8% to 378p, despite reporting that total home sales grew 71% in the first six months of its financial year compared to the prior year, thanks to the government's Help to Buy scheme and growing buyer demand.

Analysts welcomed the numbers, which beat their forecasts. Gavin Jago of Shore Capital said: ‘We expect strong earnings growth over the medium term, which should lead to increasing dividend income for shareholders and maintain our buy recommendation for the shares.’

There was at least some good news for UK-based investors as the rate of inflation dropped with the consumer prices index (CPI) rising by just 2% in the year to December 2013, down from 2.1% in November.

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