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.


Ski resorts out in the cold as France eases lockdown

Updated 27 November 2020

Ski resorts out in the cold as France eases lockdown

  • Frustrated resort operators count the cost of holiday season restrictions

MEGEVE, France:  Megeve, in the foothills of Mont Blanc, was gearing up to welcome back skiers before Christmas after a COVID-19 lockdown was eased.

But France’s government — while allowing cinemas, museums and theaters to reopen from Dec. 15 — says its ski slopes must stay off limits until 2021, leaving those who make their living in the Alpine village frustrated and, in some cases, perplexed.

“When you’re outside, when you’re doing sport outdoors, that’s not the moment when you’re going to give COVID-19 to someone. COVID-19 is passed on in enclosed places,” said Pierre de Monvallier, director of ski school Oxygene, which operates in several resorts including Megeve.

Announcing a phased easing of the lockdown on Tuesday, French President Emmanuel Macron said it was “impossible to envisage” re-opening ski slopes for Christmas and New Year, and that he preferred instead to do so during January.

“It felt like the door had been slammed in our face,” said Catherine Jullien-Breches, the mayor of Megeve, whose green slopes are generally covered with snow by mid-December.

“Unfortunately it’s a real drama for the economies of the villages and the winter sports resorts.”

People who live within 20 km of France’s Alpine resorts will able to visit from this weekend, but with the lifts staying shut, the main draw is missing.

“It’s like going on holiday on the Cote d’Azur and being told the sea is off limits,” said David Le Scouarnec, co-owner of Megeve’s Cafe 2 la Poste.

The problem for the resorts — and the hotels, restaurants, and workers who depend on them for their livelihood — is that their season is short, and they will have little time after the New Year to claw back lost revenue.

Other European authorities are wrestling with the same problem. Italy’s resorts regions are seeking approval for restricted skiing, but Austria, whose biggest cluster of the first wave of the pandemic was at the ski resort of Ischgl — where thousands were infected — is skeptical.

Prevarication cuts little ice, however, with Mathieu Dechavanne, Chairman and CEO of Compagnie du Mont-Blanc, which operates cable cars at Megeve and other resorts.

He said who could not understand why the government allowed trains and metros to operate, but barred him from re-opening. “It’s like we’re being punished. We don’t deserve this. We’re ready.”