World’s largest asset manager CEO is bearish on emerging markets

Larry Fink, CEO of BlackRock. The company, with nearly $ 8 billion (£ 6.2 billion) in assets, is the world's largest wealth manager. Photo: Pedro Pardo / AFP via Getty Images

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The CEO at BlackRock (BLK), Larry Fink believes major macroeconomic trends will weigh on emerging markets. "Data-reactid =" 33 "> The CEO of BlackRock (BLK), Larry Fink believes major macroeconomic trends will weigh on emerging markets.

Fink said he was "pretty bearish of the emerging world" during an online event hosted by the Institute of International Finance on Friday.

The company, with nearly $ 8 billion (£ 6.2 billion) in assets, is the world's largest wealth manager.

Regarding the impact of the coronavirus crisis, the CEO said the pandemic is putting an additional strain on emerging economies and their healthcare systems. "De-globalization is damaging the resource-dependent countries and the group is more sensitive to the effects of climate change," said Fink.

He also highlighted the financial impact of climate change and how it causes capital shift, saying, "When we talk about climate change, we think it is a big problem and a reallocation of capital."

Fink added, "Part of this redistribution of capital is moving out of the emerging world."

The MSCI Emerging Markets Index, which measures the performance of large and mid-cap stocks in 26 emerging markets, rose 0.5% this year.

Cumulative MSCI index performance from September 2005 to September 2020. Chart: MSCI

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Regarding other trends that weigh on the market, the head of BlackRock noted that there is insufficient trust in emerging governments.

"We're seeing a flip-flop of governments. A government could run into a lot of debt, a new government comes in and (there are) different behaviors, different attitudes, and it doesn't create trust for the debtors," said Fink.

Average demand this year hit 10-year record highs after a global surge in coronavirus cases forced many countries to reintroduce stricter coronavirus restrictions to contain a second wave.

"The risk premium that you have to ask in order to invest in the emerging markets is growing steadily," Fink told investors at the event.

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