Larry Fink warns markets may drop a further 10%
Larry Fink, BlackRock chief executive, offered a bearish outlook for markets on Friday when he forecast that stocks may fall another 10 per cent.
“I actually believe there’s not enough blood in the streets,” Mr Fink said on CNBC. “We’ll probably have to test the markets lower, and I think when we test the markets lower it’s going to be a pretty good buying opportunity.”
His comments came after the New York-based investment group reported stronger fourth-quarter profits, helped by a rebound in US equities. The S&P 500 recorded its largest gain in two years in the fourth quarter.
But the sharp decline this year “puts a negativity across the economy, a negativity to every CEO looking at his or her stock price, a negativity about business”, Mr Fink said, adding that this was likely to result in job losses this quarter and next.
He said that oil prices could fall to $25 a barrel or lower. Oil benchmarks on both sides of the Atlantic slipped below $30 a barrel on Friday.
BlackRock’s net income rose 6 per cent to $861m, while revenues crept up 3 per cent to $2.86bn. Adjusted earnings per share fell short of analysts’ forecasts, coming in at $4.75 against a consensus of $4.80 and down from last year’s $4.82.
BlackRock took in almost $54bn into its funds during the quarter, and a net $152bn for the year, with assets under management rising to $4.64tn. The S&P 500 rose nearly 7 per cent in the fourth quarter, while the FTSE Eurofirst gained almost 4 per cent.
BlackRock’s global business spans equities, bonds and alternatives such as infrastructure investing, and encompasses active management and passive investing through its iShares exchange traded funds business.
BlackRock has been working to improve performance in its active equity funds, as investors are pulled towards lower-fee passive strategies.
Mr Fink said BlackRock’s active strategies had seen $61bn of growth.
BlackRock reshuffled its management on Tuesday, including moves to combine fundamental and scientific equities businesses into one unit, with four managers reporting to president Rob Kapito, according to an internal memo.
Chief financial officer Gary Shedlin said the two groups were now “working very closely together and understanding where the overlap is and utilizing that overlap.”
“By having these two teams really merged together, you’ll see better results,” he said.