Invesco (IVZ) hit by money market outflows despite positive China stance

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Written on Nov 10, 2023

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Invesco (NYSE: IVZ) stock has dropped by 8.12% over the past 5 days.
Invesco is overweighting in Chinese assets and eyeing Hong Kong Real Estate Investment Trusts (REITs).
Despite a positive stance on Chinese assets, Invesco has been hit with a 2.5% decrease in AUM.

Invesco Ltd. (IVZ), a global asset manager, has seen a 2.5% drop in its Assets Under Management (AUM) due to significant money market outflows, despite maintaining a positive stance on Chinese assets.

The company’s stock, listed on the New York Stock Exchange as NYSE: IVZ has experienced fluctuations in the after-hours trading session in response to these developments.

Money market outflows impact Invesco (IVZ) stock price

Invesco’s preliminary AUM reported a decline to $1,450.5 billion, reflecting a 2.5% decrease from the previous month.

The net long-term outflows of $0.1 billion and substantial money market net outflows of $10.9 billion were key contributors to this downturn. Additionally, unfavourable market returns further impacted AUM, decreasing it by $27 billion.

The Invesco (IVZ) stock price declined by 2.29% in the after-hours to $12.78 a close price of $13.08 on November 9.

Money market outflows counterbalance the positive China stance

Invesco has maintained a positive stance on Chinese assets in its Asian funds. Fiona Yang, a Singapore-based fund manager at Invesco, highlighted the attractiveness of single-stock investment opportunities in China, even in the face of a weaker macroeconomic backdrop.

Invesco’s strategic shift involves an overweight position on Chinese assets, notably in Hong Kong and China, as evident in the holdings data which shows an allocation of about 42% of the fund to companies in these regions. The focus on specific companies, such as JD.com and Netease, indicates a targeted approach to navigating the Chinese market’s complexities.

This shift comes barely two months after Kristina Hooper, chief global market strategist at Invesco, indicated that allocation to Asia was likely to increase.

Furthermore, Invesco is diversifying its portfolio by increasing exposure to Hong Kong’s real estate sector. Despite the challenging market conditions, particularly in the real estate investment trust (REIT) segment, Invesco sees potential in the beaten-down sector, with dividend yields reaching the 7% to 8% range. This move aims to capitalize on income opportunities, provided interest rates remain favourable.

However, the heavy money market outflows, coupled with the overall negative sentiment, present a counterbalance to Invesco’s optimistic Asia outlook.