BlackRock sees a tepid second-half China economy despite stimulus, citing trade war woes
- Asset manager lowers China-linked emerging market equities, calling investors ‘overly optimistic’ about the effect of Beijing’s stimulus measures
- Protracted trade war has become the single most important driver in the global economy and markets, firm says
BlackRock, the world’s largest asset manager, on Monday downgraded emerging market equities linked to China for the second half of the year, saying markets were “overly optimistic” about China's ability to boost its economic growth amid the trade war with the United States.
The firm, which manages more than US$6.5 trillion in assets, said it now sees “trade and geopolitical frictions as the principal driver of the global economy and markets” and expects China’s economy to experience “a lull” from the effect of US tariffs.
As recently as a month ago, New York-based BlackRock had a positive view of emerging market equities, saying “economic reforms and policy stimulus” could support the stocks.
It had argued that “improved consumption and economic activity from Chinese stimulus could help offset any trade-related weakness”.
But the firm has now changed its viewpoint largely because the year-old US-China trade war has become the single most important factor in the global economy and marketplace, it said in its Midyear 2019 Global Investment Outlook, released on Monday.