BlackRock says he’s digging his toes in China after rout

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LONDON, Sept.28 (Reuters) – The world’s largest asset manager, BlackRock Inc (BLK.N), has said it is getting its feet back on Chinese stock markets after their steep falls this year, and betting that Beijing will soon start providing a stimulus again.

Some of China’s biggest stocks are on course for their worst quarter on record following regulatory crackdowns that hit large tech companies and education providers, and unrest now engulfing the real estate giant Evergrande. Read more

“We are dipping a toe into Chinese equities by shifting our tactical view from neutral in the middle of the year to a modest overweight,” BlackRock Investment Institute strategists said in a weekly note first released Monday.

“This call is partly rooted in our expectation of gradual short-term easing through three policy levers – monetary, fiscal and regulatory – with slowing growth likely to a level that policymakers cannot ignore.”

The company added that China’s economic growth rate is expected to drop to around 3% in the last three months of the year, from 18% in the first quarter.

However, the more than 30 percentage point underperformance of Chinese stocks relative to US stocks this year was “exaggerated”, especially with a horizon of six to twelve months.

He also said that the amount of Chinese assets held by clients at present was indeed too low given the growing influence in the world being held by Chinese financial markets.

“Currently, very small client allocations to Chinese assets would mean China would become essentially non-investable,” BlackRock said, adding that it was also slightly “overweight” in emerging market local currency debt.

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Reporting by Marc Jones in London Editing by Karin Strohecker and Matthew Lewis

Our Standards: Thomson Reuters Trust Principles.


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