NinetyOne FY22 basic HEPS down 15%

JSE-listed asset manager NinetyOne faced a challenging year in 2023 as it reported a 10% decline in assets under management (AuM) after experiencing net outflows of R237 billion. This drop was largely attributed to clients moving away from riskier assets in the turbulent economic environment. CEO Hendrik du Toit detailed the tough operating conditions the company navigated during the year, citing significant increases in interest rates, fluctuating inflation rates, and the impacts of the Russia-Ukraine war. The Federal Reserve raised dollar interest rates nearly 10 times, leading to a decrease in investor confidence in riskier assets. In addition to these global factors, domestic challenges in South Africa, such as a lack of economic confidence and stagnant institutional investment pools, added to NinetyOne's struggles. Du Toit highlighted that while there was also pressure on the company's South African book, the decline in assets would have been mitigated if measured in terms of the strengthening currency. The CEO emphasized that the drop in AuM was more pronounced among international asset owners, particularly in the Asia Pacific region, who rebalanced their portfolios towards safer assets like developed market bonds or cash. Despite the tough year, the South African mutual fund business within NinetyOne performed well, reflecting relative stability in the local macroeconomic environment. Looking ahead, Du Toit expressed cautious optimism about the market outlook, noting a shift towards a more predictable environment. He pointed out that the rapid rise in interest rates, especially in developed markets, could lead to pockets of debt stress. This shift necessitates a bottom-up approach to assessing businesses and borrowers to ensure they can withstand the current interest rate environment. Du Toit believes that active investment management will play a crucial role in identifying mispriced assets and seizing investment opportunities in the coming year. On a broader scale, Du Toit shared his views on the current environment in South Africa, highlighting missed opportunities to attract international capital amid global market uncertainties. He emphasized the importance of clear government communication, coordination with the private sector, and embracing the energy transition to secure investment and trade deals. Du Toit expressed concerns over recent diplomatic tensions with the US, underscoring the need for decisive actions to improve South Africa's standing on the global stage. In conclusion, NinetyOne faces the challenging task of rebuilding its asset base and restoring investor confidence in a rapidly changing economic landscape. The company's ability to adapt to evolving market conditions, coupled with strategic decision-making and a focus on active investment management, will be crucial in navigating the uncertainties ahead.