Aberdeen warns of ongoing market volatility as profits drop

Aberdeen Asset Management said Donald Trump's presidency will contribute to ongoing market volatility. Picture: Evan Vucci/AP

Aberdeen Asset Management said Donald Trump's presidency will contribute to ongoing market volatility. Picture: Evan Vucci/AP

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Aberdeen Asset Management today warned that Brexit negotiations and the start of Donald Trump’s term as US president will contribute to “ongoing volatility in global markets in the short term”.

The cautious outlook came as the fund manager reported a 28.3 per cent slide in annual profits as nervy investors continued to pull cash out of the Aberdeen-based group’s funds.

There is a storm looming in the wings

Nicholas Hyett

Underlying pre-tax profits for the year to the end of September fell to £352.7 million, from £491.6m the previous year, on net revenues 14 per cent lower at £1 billion.

Net outflows during the year amounted to £32.8bn, although assets under management grew 10 per cent to £312.1bn.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said outflows from Aberdeen’s higher-margin emerging markets debt and equity funds had been “hitting the business hard”.

He added: “There are suggestions that conditions were improving by the end of the summer, as weaker sterling boosted overseas asset values and flows turned positive on emerging market equity products.

“Unfortunately there is a storm looming in the wings. With a year end of 30 September, these results miss the period after the US election when Donald Trump’s ‘America First’ rhetoric caused a significant fall in emerging markets. With Mr Trump looking set to pull out of the Trans-Pacific Partnership, and even calling the North American Free Trade Agreement into question, it looks like the US could shut its doors to a significant proportion of emerging market output. That could spell trouble ahead.”

Aberdeen chief executive Martin Gilbert acknowledged that investor sentiment had been dented by “economic and political newsflow”, but insisted the group was well placed to meet the challenges ahead.

He added: “By continuing to invest in the business and by being a good steward of our customers’ money we are committed to helping our investors – from individuals through to institutions – achieve their financial goals.”

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Aberdeen’s board proposed holding the final dividend at 12p a share, to be paid on 9 February, giving a total payout of 19.5p – also unchanged from last year.

Simon Troughton, who succeeded Roger Cornick as chairman at the end of September, said: “Future political and economic events, including the UK’s negotiations to exit the EU, the start of president-elect Trump’s term in office and European elections, will contribute to ongoing volatility in global markets in the short term.

“However, until there is greater clarity, it is difficult to predict the impact on markets over the medium and longer term. We will not allow any such volatility to distract us from our long-term approach to investing, and we remain well positioned to identify and grasp the opportunities that may arise to deliver further profitable growth.”

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