May 23, 2016

    BlackRock: Rate moves hurting global economy

    A LEADING asset manager has warned investors that there are macroeconomic challenges to long-term growth.

    But investment opportunities still abound, noted Larry Fink, chairman and chief executive of asset management giant BlackRock.

    He said tackling these challenges will take more than just the interest rate manipulation central banks are engaged in. The real urgency is for governments to shift their focus away from monetary policy back to stimulating growth and job creation through fiscal stimulus.

    He was speaking last week in Hong Kong at his firm's annual Asia Media Forum.

    "From the macro perspective, central banks have been the stabilising force in the world but we're in the eighth year of low interest rates. Now we can say clearly that, the low and in Japan's case, negative interest rates are harming the global economy."

    His comments came amid yet another bout of hand-wringing in the global market last week, when hints of a June hike in the latest Fed meeting minutes triggered sell-offs.

    Against that backdrop, equity investment still makes sense but it has to be calibrated with a long-term view, he stressed.

    Timing market volatility is not something an average investor can hope to do, he added.

    That volatility has been evident in Singapore where the benchmark Straits Times Index (STI) has gone through two rounds of sizable corrections so far this year.

    The STI is now holding the line at around 2,730 points after paring some 7.8 per cent since April. Last week, the market benchmark gained 1.06 per cent but a still bearish mood was reflected by the tepid debut of Manulife US Real Estate Investment Trust on Friday.

    Market watchers are expecting the index to remain range-bound, with a string of upcoming Asian economic data likely painting a mixed outlook that requires caution.