New York: BlackRock CEO Larry Fink said on Friday that he believes emerging markets are moving down because he sees strong macro trends weighing on the asset class.
“I’m pretty clumsy about the emerging world,” Fink said during an online event hosted by the Institute of International Finance.
He said the COVID-19 pandemic is affecting 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 the effects of climate change.
“When we talk about climate change, and we think it’s a big problem and a redistribution of capital,” Fink said, “part of the redistribution of capital is movement from the emerging world.” Outside of these global macro trends, the lack of confidence in EM governments further harms the asset class, the BlackRock chief said.
“We are seeing a flip-flop of governments. One government can incur a lot of debt, new government is coming in and there are different behaviors, different attitudes, and it creates no confidence for the debtors,” Fink said. said.
“The risk premium you will have to claim to invest in emerging markets is constantly increasing.” After a sharp rise in March when COVID-19-related shutdowns spread around the world, the current year’s premium has asked to keep EM debt at its highest in more than a decade.
BlackRock is the world’s largest asset manager with nearly $ 8 billion under management.
Fink added that many emerging countries are going to have to restructure their debt and that their leaders are not aware of who owns the debt and how it is affecting a restructuring.
“I had three or four conversations with leaders from different emerging countries … it’s like I’m telling them some facts from outer space,” Fink said.
Source: Gulf News