Another asset manager counted the cost of investors’ aversion to emerging markets, with Aberdeen Asset Management (ADN.L) reporting £4.4 billion of outflows to land it at the bottom of a flat FTSE 100 on Thursday.
Aberdeen shares, which have already fallen 10% so far in January, dropped 3.3% to as management told shareholders ‘business flows reflected the continuing negative sentiment towards Asian and emerging markets generally’.
Two days ago rival asset manager Ashmore (ASHM.L) – which is even more focused on emerging markets than Aberdeen – reported net outflows of $3.5 billion from its funds for the same period.
Another investment company, private equity firm SVG Capital (SVI.L), was also suffering on Thursday morning, with shares down 8.6% after the news that Aegon had disposed of £20million worth of shares in the FTSE 250 company.
The UK’s benchmark FTSE 100 managed to cling onto gains made yesterday, up 0.1% at 6,830 and heading for its fifth day of gains. That means the index is zooming in on last year’s high of 6,875 as investors put aside worries over valuations and the tapering of US stimulus.
Mining shares supported the Footsie, with gains of around 3% from BHP Billiton (BLT.L), Fresnillo (FRES.L) and Antofagasta (ANTO.L). Rio (RIO.L) rose 2.8% to £33.46 after beating its targets for cost cutting in 2013 and exceeding expectations for copper production in the last quarter of 2013.
‘Buy’ Rio Tinto shares, says Liberum analyst Richard Knights. ‘The reasons to buy RIO here stem from its best-in-class balance sheet and scope for outperformance on capital management initiatives’, he says.
The strength in resources company shares offset declines in consumer firms, with Associated British Foods (ABF.L) suffering from a 28% decline in sugar sales in the 16 weeks to 4th January. Shares in ABF fell nearly 3% to £26.16 with losses mitigated by another strong performance from its Primark cheap clothing business.
Numis cut its ABF rating from ‘hold’ to ‘sell’. Analyst Charles Pick said: ‘The shares have advanced by 251p or 10.3% this year and look to have run ahead too strongly with profit taking warranted.’
Home Retail’s (HOME.L) performance in the 18 week period to 4th January 2014 was better than the City had expected, lifting shares 3% to 207p. Among the brands owned by the group, Argos store sales rose 3.8%, while Homebase reported a 4.7% rise in like for like sales.