Emerging Markets Resilient to Trump's Trade Policies Impact
By Yamini Kalia and Iain Withers
(Reuters) -Emerging markets can withstand "knee-jerk" trading under the early days of a second Donald Trump presidency in the U.S. and the long-term outlook remains positive, the CFO of emerging markets-focused wealth manager Ashmore told Reuters.
Trump slapped 10% tariffs on goods from China this week, but shelved planned tariffs on Mexico and Canada for a month.
"Often what can be announced and subsequently implemented are two slightly different things," CFO Tom Shippey said on Friday after Ashmore reported first-half results.
"We're watching the actual implementation obviously incredibly carefully and it's likely to have sort of more medium-term impact than the sort of immediate knee-jerk trading reaction."
Long-term, emerging market assets appeared undervalued and there was a strong argument for investors diversifying away from over-dependence on U.S. stocks, Shippey added.
Analysts see the prospects for emerging markets as challenging in the wake of Trump's actions.
"(We) continue to see limited upside over the next year given a challenging outlook for EM in 2025, in our opinion," analysts at JPMorgan said in a note.
Ashmore reported a 33% fall in first-half profit on Friday, which beat market expectations. The profit was pressured by lower managed funds and muted investor appetite, but it did report lower outflows for the six-month period of $1.1 billion, compared with $4.5 billion the prior year.
British fund managers struggled with a fickle clientele base in 2024 as macroeconomic challenges ranging from a rocky response to the UK budget to volatile markets ahead of the U.S. elections weighed on investor sentiment.
But some analysts believe clients may return to riskier assets once there is more clarity on Trump's policies.
"It remains the case that EM valuations are attractive (both debt and equities), and when investor risk appetite recovers and client activity increases, this should bode well for Ashmore over the medium term," analysts at Peel Hunt said.
London-based Ashmore reported pre-tax profit of 49.9 million pounds ($62.02 million) for the six months ended December 31, against 74.5 million pounds last year.
($1 = 0.8046 pounds)
(Reporting by Yamini Kalia in Bengaluru; Editing by Mrigank Dhaniwala, Subhranshu Sahu and Jane Merriman)
