Ashmore share price forms bullish engulfing as AUM slips

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Ashmore Group (LON: ASHM) share price continued its bearish trend as concerns about the company’s future remain. The shares plunged by another 2.3% on Friday, bringing the total year-to-date losses to 34%. It has fallen by more than 60% from its highest point on February 2020 as the short interest has surged.

Ashmore AUM is falling

Ashmore Group is one of the top struggling London fund managers. It focuses on emerging markets, where it invests in assets in countries like Indonesia, Colombia, India, and Saudi Arabia among others. It invests in equities, debt, currencies, and alternative assets.

Ashmore share price plunged as the company published weak asset growth figures. Its total assets under management crashed by 12.5% in the third quarter. Total AUM dropped to 56 billion pounds from the previous 64 billion. This decline was mostly because of outlows of over 5 billion pounds. Weak markets saw it lose the other 3 billion pounds.

All business segments of Ashmore Group are falling. For example, its external debt crashed by 17.4% while local currency, corporate debt, and blended debt crashed by more than 11%, 10%, and 14.6%, respectively. Fixed income assets dropped by 13.5% while equities and alternatives fell by 13.5% and 6.3%.

Ashmore Group’s AUM has dropped in the past few quarters straight, meaning that its total revenue and profitability will continue being compromised for some time. This is also in line with the performance of other fund managers like Abrdn, which I wrote about here. Scottish Mortgage Investment Trust has also seen its assets crash.

As a result, Ashmore Group has seen its short interest plummet. A high short interest means that the number of investors short the company is rising. They include Ken Griffin’s Citadel and Steve Cohen’s Point72.

Ashmore share price forecast

Like other finance and banking stocks, Ashmore has had a difficult year as it crashed by more than 34%. The stock has moved slightly above the important support level at 186p, which was the lowest level on July 15. The stock remains below all moving averages while the Relative Strength Index (RSI) continued dropping.

A closer look shows that the stock has formed what looks like a bullish engulfing pattern. In price action analysis, this pattern is usually a bullish sign. Therefore, the stock will likely have a relief rally in the next few days.

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