Tags: BlackRock | Fink | Market Decline | Old-Fashioned Correction

BlackRock's Fink Calls Market Decline 'Old-Fashioned Correction'

Wednesday, 05 February 2014 12:34 PM

BlackRock Inc. Chief Executive Officer Laurence D. Fink, whose firm oversees $4.3 trillion in assets, said the recent market decline is a temporary setback as opposed to a departure from current economic growth.

“I look at this as a good old-fashioned correction,” Fink said during an interview with Erik Schatzker and Stephanie Ruhle on Bloomberg TV’s “Market Makers.”

Fink said BlackRock isn’t seeing long-term investors change their behavior, and that volatility is being caused by hedge funds that had made correlated trades.

Stocks have tumbled worldwide in 2014, erasing some $3 trillion in value this year amid a selloff in emerging-market currencies as China’s economy slows and the Federal Reserve cuts back stimulus. The Standard & Poor’s 500 Index has slumped about 5 percent in 2014 and the Dow Jones Industrial Average has fallen 6.8 percent.

“I’m surprised the market is upset the Chinese economy has slowed down in the short run,” Fink said. Slower growth in China isn’t “as problematic as some people believe.”

In November, Fink predicted a chance of a 15 percent drop in stock markets because of political risks in China, Japan, France and the U.S. A week later, he said he was less worried about the markets after China announced economic reforms and signs were mounting that U.S. policy makers would pass a budget deal.

Taper Unaffected

Fink said investors cannot rely on central bank moves any more for growth. The market decline shouldn’t have an effect on the Federal Reserve’s decision to taper its unprecedented asset purchases, especially because the U.S. is growing at a faster rate than last year, so the central bank has room to “unwind.”

Benchmark indexes rebounded Tuesday after the S&P 500 slid 2.3 percent on Feb. 3 to close at the lowest level since October. The Chicago Board Options Exchange Volatility Index, known as the VIX, increased as much as 8.4 percent Wednesday after losing 11 percent Tuesday, the most since Dec. 18.

Fink, one of the co-founders of BlackRock, said in 2012 he would invest all of his personal wealth in equities, and has said he’s bullish on the U.S. in the long term because of its banking system, improving housing market and supply of natural gas.

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BlackRock Inc. Chief Executive Officer Laurence D. Fink said the recent market decline is a temporary setback as opposed to a departure from current economic growth.
BlackRock,Fink,Market Decline,Old-Fashioned Correction
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2014-34-05
Wednesday, 05 February 2014 12:34 PM
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