Market report: Ashmore soars as it shrugs off the Trump effect

Shares in Ashmore took a pounding when Donald Trump won the US election in November, but investors piled back into the emerging-markets fund manager today on hopes it is no longer leaking money.

The FTSE 250 group revealed last week that Trump’s victory triggered $700 million (£560 million) of outflows in the final quarter of 2016, but UBS today called the rush for the exit an overreaction to rising US interest rates and a stronger dollar.

In fact, they reckon Ashmore is raking it in, forecasting $200 million of inflows for this quarter, the first time they have been positive for three years amid the emerging-markets downturn.

It predicts $2 billion of inflows for the whole of 2017, but thinks the current share price implies $2 billion-$3 billion of outflows.

UBS analyst Michael Werner said that a month after the election money flooded back to the fund manager. “We argue this, coupled with the rebounding performance in emerging-market debt, bodes well for Ashmore in 2017-18.”

The investment bank’s upgrade from neutral to buy boosted the shares by 18.5p, or 6.3%, to 311.7p, their highest level since the election result.

The rally on Wall Street made its way to London as the FTSE 100 put on 39.48 points to 7189.82.

Construction firms were the winners on the blue-chip index after the Senate challenged Trump to stick to his plans to spend $1 billion on repairing America’s roads, bridges, railways, and tunnels.

It lifted tool hire firm Ashtead, which generates most of its profits in the US, 50p, or 3.2%, to 1614p and Irish building materials group CRH, which also has a big US division, by 76p, or 2.7%, to 2932p.

Shares in BT began their long journey back from yesterday’s disastrous profit warning by edging up 3.75p to 306.75p.

The rise was tempered by a wave of analyst target price cuts, including one from its own broker JPMorgan Cazenove, which has a neutral rating on the shares with a lower target price of 330p, down from 390p.