The JSE’s major listed asset managers are being battered by the uncertain global economic climate and weak equity markets.
Global asset management company Ninety-One yesterday reported a 16% decline in pre-tax profit to £110.6 million (R2.3 billion) for the six months to September 30.
Similarly, Coronation Fund Managers recently warned its fund management earnings per share for the year to the same date was expected to fall by between 10% and 20%. Coronation, which has mainly South African clients, is expected to report its interim results on November 22.
Ninety-One’s founder and CEO Hendrik du Toit said in a statement the global asset management group had struggled against sharply lower financial asset prices arising from the impacts of rising inflation and interest rates, and geo-political uncertainty.
The share price of Ninety-One decreased by 5.03% to R42.07 on the JSE yesterday afternoon, bringing the total decline in the price to 19.2% over a year.
Coronation’s share price fell 1.5% to R35.35 yesterday afternoon, to a level that was 37.7% lower than the price it traded at on the same day a year ago.
Du Toit said their high levels of client engagement could not counter the impact of the external environment on the results.
Ninety-One’s closing assets under management fell by 8% to £132.3bn. Net outflows came to £3.2bn. The interim dividend of 6.5 pence per share was consistent with dividend policy, and 6% below the 6.9 pence paid out at the same time last year.
“We saw net outflows in the first half, caused by lower levels of new business volumes and portfolio de-risking by clients. We anticipate that these tough conditions will persist for the foreseeable future,” Du Toit said in a statement.
He said they however remained committed to the long-term strategy and were focused on managing client investments “to the standards they expect” and delivering “industry-leading service levels”. Long-term investment performance had remained competitive, he said.
Basic earnings per share decreased by 16% to 9.4 pence and adjusted earnings per share fell 7% to 9 pence. Staff hold 28% of the company’s shares.
“We see ample long-term growth opportunities ahead in spite of market conditions and the rapidly changing world in which we operate. We intend to navigate the turbulence with confidence. This is not a time for distractions. Our focus is firmly on execution. Now, more than ever, we will focus on the investment task at hand and do our best to meet the needs of clients,” Ninety-One said in a statement.