Aberdeen Asset Management shares fell to a three-and-a-half-year low today, weighed heavily by a Barclays downgrade.
Investors were rattled by a note from the bank downgrading the stock to “underweight” from “equalweight” amid worries it would need to work harder to slash costs.
Aberdeen closed 2.4 per cent lower on the news at 275.2p, its lowest point since August 2012.
Aberdeen fell 33 per cent in 2015, and Barclays wrote that although it’s “tempting” to view the stock’s underperformance as solely a macro call on emerging markets, significant other areas remain vulnerable to outflow risks.
Some £191m, or two-thirds, of Aberdeen’s assets under management invested in areas that shrank last year, and the negative sentiment looks set to continue into 2016, as Barclays forecast outflows of over £20bn over the year, on top of the £34bn of outflows for 2015.
Aberdeen outlined plans for £50m in cost cuts in its full-year results in November, but these savings “appear modest in response” against the shrinking asset base, Barclays wrote, forecasting revenue declining by 13 per cent.
“In the light of this negative earnings momentum and outflow risk, we downgrade,” it wrote.
Today’s steep fall gives Aberdeen a market value of £3.6bn, putting it dangerously near relegation from the FTSE 100 index when it’s next reshuffled in March.