BlackRock’s Fink Says Positive on China, Wary About EuropeJonathan Burgos and Netty Ismail
China’s leadership is making progress in economic reforms that should help moderate future boom and bust cycles, BlackRock Inc. Chairman Laurence D. Fink said at an investor conference in Singapore.
“The Chinese leadership is doing a good job,” he said at the 2015 Credit Suisse Megatrends conference. “Investors should be expecting the Chinese economy to slow” as the government engineers a transition and easing growth is actually a “positive,” he said.
Even so, it is too early to say whether recent declines in Chinese stocks will end in a bust, and the country needs more robust capital markets to moderate its boom and bust cycles, said Fink, who co-founded BlackRock and helped make it the world’s biggest money manager with $4.77 trillion in assets.
Fink said Europe has fundamental problems and a huge need for structural and fiscal reforms.
“I’m not ready to say I like Europe for a long-term investment,” even though growth there is poised to outpace the U.S. in the first quarter, he said.
The U.S. economy probably expanded 1.35 percent in the three months through March 31, while the euro area grew 1 percent, according to the median forecasts of separate Bloomberg surveys.
The threat that Greece will default on its debt and exit the euro area has created a “systemic risk” that countries such as Portugal and Spain will do the same, Fink said.
“If Greece does not capitulate, Europe has no choice but to kick Greece out,” he said. “The Europeans have no choice but to be firm. The outcome of Greece unwilling to meet its obligation is very negative for Greek citizens.”
Speaking about the U.S. economy, Fink said the Federal Reserve is “reluctant” to start the process of normalizing monetary policy. The “risks are enormous and central banks understand their responsibilities as they navigate through this low interest-rate environment,” he said.
Fink said in a telephone interview on April 16 that pressure from a stronger dollar will ease because the currency’s strength won’t last and the rally was premised on a view the Fed will tighten its monetary policy soon.
Disappointing payrolls data were among weaker-than-forecast economic reports that have damped speculation the central bank will increase borrowing costs in June, making September more likely, according to economists surveyed by Bloomberg.
BlackRock reported last week that first-quarter profit rose 8.7 percent after investors added new money to its funds. The company attracted more than $70 billion in long-term new money, more than half of which went into index-tracking products that generally charge lower fees.