Aberdeen Asset Management’s chief executive Martin Gilbert wants a Fed rate rise in December to avoid emerging market sell-off
We need the Federal Reserve to raise interest rates in December, was the message from the chief executive of Aberdeen Asset Management Martin Gilbert.
He told City PM a Fed rate hike “won't cause problems in the emerging markets (Ems) because it's been so well signalled.
“The problem is if the Fed doesn't raise rates, it will make the markets negative. A hike is expected now, and if it doesn't come [they] will think what does the Fed know about the emerging markets that we don't?”
Read more: Barclays are bearish on China
Aside from that, Gilbert does not want more government interference, such as injecting more liquidity in to the bond markets, which he says is unnecessary: “The fact everyone's been talking about another bond market crisis means it won't happen. What we need now preparation and rates.”
Today Aberdeen Asset Management reported its full year results. The investment giant, which specialises in Asian markets, saw investors withdraw £12.7bn from its funds during the three months from July to September. Total assets at the end of the period were valued at £283.7bn – down 12.6 per cent from £324.4bn a year earlier.
However revenues rose five per cent, to £1.2bn, and pre tax profits were almost unchanged at £353.7m.
Read more: UK assets under management are set to reach a record £7.4 trillion in 2015
Gilbert was positive, telling City PM: “We had a great set of numbers considering emerging markets are so out of fashion. The challenge is next year, and we'll be keeping an eye on the numbers and cutting costs, just like [any business] must,” adding:
“While we believe the current weakness may have some way to run, the long term fundamental attractions of investing in these high growth economies remain compelling for patient investors,” and pointed out the growth in China, even as it slows to six per cent, is far greater than the UK or US could hope for.
Gilbert said he had “no idea where emerging markets stand. I think they're closer to the bottom than where they were, but we have some more to get through yet.”
He doesn't pay attention to the conflicting economic forecasts, instead, he said, “the key is to look at the companies. We tend to ignore the economics, and just invest in the good businesses.”