BlackRock's Fink 'pretty bearish' on emerging markets

NEW YORK (Reuters) - BlackRock CEO Larry Fink said on Friday he believes emerging markets are on a downward slide as he sees strong macro trends weighing on the asset class. 'I am pretty bearish on the emerging world,' Fink said at an online event hosted by the Institute of International Finance

Reuters October 17, 2020 07:05:09 IST
BlackRock's Fink 'pretty bearish' on emerging markets

BlackRocks Fink pretty bearish on emerging markets

NEW YORK (Reuters) - BlackRock CEO Larry Fink said on Friday he believes emerging markets are on a downward slide as he sees strong macro trends weighing on the asset class.

"I am pretty bearish on the emerging world," Fink said at an online event hosted by the Institute of International Finance.

He said the COVID-19 pandemic is taxing emerging economies and their health systems more than developed countries, de-globalization is hurting the commodity-dependent countries and the group is more sensitive to effects of climate change.

"When we talk about climate change, and we think that's a big issue and a reallocation of capital," Fink said, "part of that reallocation of capital is movement out of the emerging world."

Outside these global macro trends, a lack of trust in EM governments is further hurting the asset class, the head of BlackRock said.

"We're seeing a flip-flop of governments. One government could raise a lot of debt, new government comes in and (there's) different behaviors, different attitudes, and it doesn't create any confidence for the debt holders," Fink said.

"The risk premium that you're going to have to demand to invest in the emerging markets is growing persistently."

Following a sharp spike in March as COVID-19 -related shutdowns spread all over the world, the rolling-year average premium demanded to hold EM debt rose to its highest in more than a decade.

(GRAPHIC - JPMorgan EMBI Global Diversified: https://graphics.reuters.com/IMF-WORLDBANK/BLACKROCK/xlbpgwoqepq/chart.png)

BlackRock is the world's largest asset manager with almost $8 trillion under management.

Fink added that many emerging countries are going to have to restructure their debt and their leaders are not aware of who is holding the debt and how that affects a restructuring.

"I have had three or four conversations with leaders of different emerging countries... it's like I'm telling them some facts from outer space," Fink said.

(Reporting by Rodrigo Campos in New York and Ross Kerber in Boston; Editing by Cynthia Osterman)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.