BlackRock’s Fink ‘bearish’ on emerging markets

CEO of BlackRock, Larry Fink: COVID-19 pandemic is taxing emerging economies and their health systems more than developed countries. (AFP)
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Updated 18 October 2020

BlackRock’s Fink ‘bearish’ on emerging markets

  • ‘The risk premium that you’re going to have to demand to invest in the emerging markets is growing persistently’

NEW YORK: BlackRock CEO Larry Fink said that 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, deglobalization 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.

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.


US to sue Google in biggest antitrust case in decades

Updated 20 October 2020

US to sue Google in biggest antitrust case in decades

  • The move comes after months of investigations by federal and state antitrust enforcers

WASHINGTON: The US government was preparing to sue Google Tuesday in what would be the biggest antitrust case in decades, media reports said.
The Wall Street Journal and New York Times said the Justice Department suit will accuse the California tech giant of illegal monopoly behavior to preserve its dominance in Internet search and advertising.
The move comes after months of investigations by federal and state antitrust enforcers seeking to check the power of the massive technology firm and parallel probes into other giants such as Amazon, Facebook and Apple.
It was not immediately clear what remedy the government was seeking in the suit, which could take years to resolve. But it could force changes in business practices or break off segments of the Google empire.
The Justice Department had no immediate comment but scheduled a briefing for media later Tuesday. Google did not immediately respond to a request for comment.