Jefferies downgrades Ashmore to 'hold' from 'buy'

Jefferies downgraded Ashmore Group Plc   Follow | ASHM on Wednesday to 'hold' from 'buy' and it cut the price target to 170p from 220p as it said it was moving to the sidelines until a macro catalyst emerges.
The bank said macroeconomic and geopolitical uncertainty has continued to weigh on emerging market (EM) flows, and it now expects the fund flow inflection for Ashmore to take longer to materialise. It forecasts net new money to turn positive in FY 1H26.

"Geopolitics and uncertainty over the path of Fed rate cuts have led to renewed uncertainty for emerging markets," Jefferies said.

Jefferies said the market is currently pricing in Fed rate cuts of only 65 basis points in 2025, down from 140 basis points at the end of September,

"We expect this to continue to weigh on demand for EM external debt funds as the yield differential versus Treasuries becomes less attractive," it said.

"For EM local currency debt, the significant strengthening of the USD since end-Sept is likely to continue to be a headwind. The outlook for EM equities, meanwhile, remains uncertain, as potential new US tariffs could disrupt supply chains and weigh further on investor sentiment."

Jefferies said it expects a deterioration in net new money for Ashmore, consistent with macro flows, as well as negative mark-to-market.

"Recent share price weakness and fundamental support - excess capital is 50% of market cap and 10% dividend yield looks secure - limits further downside, but we downgrade Ashmore to hold as our new 170p PT offers insufficient upside."

At 1035 GMT, the shares were down 3.7% at 150p.