Liberum upgrades Ashmore as emerging market sentiment improves

Liberum has upgraded Ashmore Group, removing its 'sell' rating from the emerging markets investor after final results were better than it predicted.

Assets under management of $52.6bn was 12% higher than expected, with renewed favourable sentiment in EM resulting in $1.2bn of positive market performance versus forecasts of a big decline.

The broker has now listed its AUM forecast 15% per year for the 2017 and 2018 financial years, driven by higher inflow and performance assumptions.

Ahead of first-quarter 2017 IMS due on Friday, Liberum noted management’s cautious comments about a return to net inflows in the short-term, and so moved to a 'hold' rating.

Indicators showed continued growth in EM confidence and while flows seemed to have mainly been into ETFs, with active funds lagging, analyst Justin Bates said this might simply be a timing issue.

He increased his earnings per share forecasts by 40% for the current and next year by 2-5% ahead of consensus, implying a p/e ratio of 20 times and a target price of 379p.