The influential analysts at JP Morgan Cazenove have taken a closer look at the asset management sector ahead of the shifting of the industry’s tectonic plates with the introduction of Europe-wide MiFID II regulations in January.
“The larger asset managers and exchanges are likely to be prepared, but uncertainty remains on the actual impact when the rules go live,” it said in a note to clients.
“Brexit also creates uncertainty; whilst many larger asset managers already have UK and EU domiciled funds, this could be an issue for smaller AMs.”
The Anglo-American investment bank prefers the specialist asset managers to their mainstream counterparts and upgraded Ashmore Group plc (LON:ASHM).
READ: Ashmore group sees 11% increase in assets under management in latest three months
It moved to ‘neutral’ from ‘underweight’, reflecting “stronger investment performance/flow and outlook”.
It has moved its share price target to 395p from 350p. At 10.30am, the shares were up 1.6% at 392p.
A look at the exchange businesses too
In the same note, JPMC’s analysts looked at the companies that run Europe’s major exchanges ahead of the introduction of MiFID II.
It said the new transparency regulations could be “unhelpful for volumes, although [they] could bring potential opportunities through the requirement for increased transparency and regulatory reporting requirements”.
The investment bank said the departures of chief executives at both the London Stock Exchange Group plc (LON:LSE) and Deutsche Borse AG (ETR:DB1) will be followed by a renewed focus on strategy.
It upgraded NEX Group plc (LON:NXG) to ‘overweight’ from ‘neutral’, saying it would “likely be the biggest beneficiary of a cut in the US tax rate”. JPMC added: “We estimate a high single-digit earnings impact.”