Ashmore, the emerging market specialist that is one of the biggest international investors in struggling Chinese real estate group Evergrande, reported a $3.1bn fall in assets under management during the past quarter on the back of disappointing investment performance.
The UK-listed fund house said its assets under management declined from $94.4bn to $91.3bn over the three months to the end of September, with negative investment performance accounting for $2.1bn of the decrease. Clients additionally pulled $1bn from the group.
“[Ashmore’s] exposure to Evergrande and the wider Chinese real estate sector, has undoubtedly been a component of the recent additional underperformance,” said David McCann, an analyst at the broker Numis.
Ashmore has one of the highest exposures of international asset managers to Evergrande, the world’s most indebted developer. According to data compiled by Bloomberg, the FTSE 250 group had more than $400m of Evergrande bonds as of the end of June.
Evergrande, which is on the brink of default, has been affected by new rules imposed by Beijing about a year ago that forced big Chinese developers to reduce their borrowings. The real estate group has missed at least five bond interest payments in the past month, while its competitors have also struggled amid the rule changes and slowing sales.
Ashmore declined to comment on how its performance was affected by its Evergrande exposure. But in its quarterly update, it said returns were hit by a change in “market sentiment” and investor risk appetite.
Ashmore’s chief executive Mark Coombs said: “Investors have focused increasingly on the global growth outlook, including the impact of higher commodity prices, supply chain challenges and China’s ongoing reforms.”
But he added that there was a “positive fundamental backdrop” for emerging markets, thanks to growing Covid-19 vaccination rates and the easing for coronavirus restrictions, coupled with rising interest rates helping to make yields attractive.
Despite this, Ashmore said assets under management in local currency debt, corporate debt and blended debt had all fallen during the quarter.
Its share price was down less than 1 per cent by lunchtime on Thursday; it has fallen by a quarter so far this year.