black rock cut its exposure to Chinese equities and government bonds, and broader Asian fixed income, to neutral from a slight overweight, citing a deteriorating macroeconomic and geopolitical outlook.
“We believe that China’s ties with Russia have also created a new geopolitical concern that requires greater compensation for holding Chinese assets,” he said. Jean Bouvindirector of the BlackRock Investment Institute in a weekly note to clients.
BlackRock also said it raised the rating on the bonds from the European government to neutral, with the view that the market price on interest rate hikes in the euro zone is too aggressive, given the impact of volatility in energy values on growth.
Boivin’s team also said it saw value in investment-grade credit, where annual coupon income was approaching 4%, the highest in a decade.
The asset manager saw “little chance of a perfect economic scenario of low inflation and growth. Last week’s market decline shows that investors are adjusting to this reality.”