Ann Crotty Writer-at-large

Coronation Fund Managers’ share price dropped 8.53% to R51.13, the biggest drop in eight months, following the release of a worse-than-expected trading statement on Tuesday. In a statement Coronation advised shareholders that profits for the six months to end-March 2019 are likely to be down 20% and 30%. One industry analyst, who wanted to remain anonymous, said the earnings drop is significantly worse than the market expected and highlights how sensitive earnings are to any reduction in assets under management. He said the six-month result is likely to put pressure on Coronation to restructure its controversial remuneration scheme. Despite recent poor performances, the scheme provides for generous rewards to the top executives because of the endowment effect of decades of strong fund inflows. But the analyst noted the share price rebounded from its day low indicating the market believes Coronation reached its low point during the last quarter of calendar 2018. “They’ve had a g...

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