Ninety One struggles with dampened investor appetite for equities

Ninety One, the JSE- and London-listed asset manager, expects the dampened appetite for emerging markets and public equities to remain in place for the rest of its financial year to end-March 2024, CEO Hendrik du Toit said yesterday.

Ninety One, the JSE- and London-listed asset manager, expects the dampened appetite for emerging markets and public equities to remain in place for the rest of its financial year to end-March 2024, CEO Hendrik du Toit said yesterday.

Published Nov 16, 2023

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Ninety One, the JSE- and London-listed asset manager, expects the dampened appetite for emerging markets and public equities to remain in place for the rest of its financial year to end-March 2024, CEO Hendrik du Toit said yesterday.

He said at the release of their results for the six months to September 30 that rising interest rates and increased geopolitical uncertainty have caused investors to be cautious.

“Equity markets have been driven by narrow sectoral and geographic performance. These factors have dampened investor appetite for emerging markets and public equities in general,” he said.

The caution that the company had signalled at the beginning of the reporting period had proved justified.

“On the surface, equity markets rose, but the rally was extremely narrow and largely restricted to a small number of large US technology companies,” said Du Toit.

Closing assets under management (AUM) decreased by 5% in the six months to £123.1 billion (R2.8 trillion), driven by limited appetite for risk on strategies.

At the end of the 2023 financial year AUM stood at £129.3bn, £143.9bn at the end of the 2022 financial year, £130.9bn at the end of the 2021 year and £103.4bn at the end of the 2020 financial year.

The interim dividend fell to 5.9 pence per share from 6.5 pence at the same time a year before. The dividend for the 2023 financial year amounted to 18.2 pence.

A “competitive long-term investment performance” was reported. Staff shareholding increased to 29.4%. Net outflows came to £4.3bn. Basic earnings per share fell 5% to 8.9 from 9.4 pence.

"Our response is to intensify our efforts in areas that we can compete for market leadership, delivering best-in-class service to our clients and applying strict cost discipline, while maintaining our long-term growth mindset,” said Du Toit.

He said that in times like these the owner culture that had been nurtured over many years became a critical success factor. The staff shareholding has increased steadily from 21% at the end of the 2020 financial year.

“We are confident in our ability to regain our growth momentum. The people of Ninety One have the team spirit, skill and self-belief to prevail in the face of hostile business conditions. In spite of the well-known structural challenges faced by the active investment management industry, the dominant headwinds are cyclical in nature,” he said.

“We continue to build our business for the long term, while applying appropriate cost discipline. Ninety One is a resilient business with a long track record of operating in different market conditions. We see ample long-term opportunities ahead,” said Du Toit.

Ninety One’s share price on the JSE was 0.88% firmer at R40.20 yesterday morning, but 10.5% lower than the price on the same day three years ago.

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