BlackRock chief urges investors to place all their bets on stocks
Take your money out of the bank and put it in the stock market - because prevailing low deposit rates will not be enough to cover your retirement needs, the head of the world's largest money manager says.
'If I have money to invest, I will invest 100 per cent in equities - but not in bonds,'' said Larry Fink, the founding chairman and chief executive of BlackRock with US$3.5 trillion in assets under management, who was in Hong Kong to meet clients.
Fink said Asia had a strong economic growth story, but Asians traditionally had a very strong savings culture and tended to focus on their bank accounts.
'Capital markets in Asia should develop further, and people here should shift their money from savings to investment, particularly equities,'' he said.
This would be healthy because bank deposit rates were now almost zero, while safety bets such as treasury bonds also offered minimal returns, he said.
'It is not that bond investment is bad, but [Federal Reserve] chairman [Ben] Bernanke is telling you 'I am going to keep bond yields so low you can't make a return to meet your needs owning bonds',' he said.
Fink, who co-founded BlackRock in 1988, said high-yield equities were the choice because they were now trading at 30-year lows. Investors should not worry too much about recent stock market volatility triggered by the European debt crisis.
'BlackRock does not focus on short-term bad news but we invest for the long term. Over 20 to 30 years, bond yields will not match the return of equities investments. It is easy for one to decide to invest heavily in equities for the long term,'' he said.
While many other banks and securities firms were laying off people, Fink said BlackRock would continue to hire, particularly in Asia, the weakest link of the group's global operations. 'We will increase our operation in Asia as we believe in the future of the region,' he said.
The group last year hired 900 workers, bringing its global workforce to about 10,000. In Asia, it has about 2,000 staff. Last year, it hired several heavyweights in Asia, including Mark McCombe, a former HSBC Hong Kong chief executive, as its Asia-Pacific chairman.
McCombe said Asia's economic growth and the growing yuan business would provide opportunities for asset management companies.
