Saturday 19 January 2019

Fink warns market risk is at 2007 levels


Blackrock chief executive Larry Fink Photo: Reuters
Blackrock chief executive Larry Fink Photo: Reuters

Pete Schroeder

BlackRock chief executive Larry Fink has warned that financial markets are ignoring underlying risks, which means there could be a "big correction" if a major surprise world event occurred.

Fink, head of the world's largest asset manager, said the amount of risk in the financial system is comparable to 2007 levels. He said that consistently low volatility in the stock market, as well as the overall strength of the global economy, may mean markets are not accounting for that risk as much as they did in the past.

"If there is a major event, which I don't foresee anything, but if there is one, we could have a big correction," he said at the annual meeting of the Institute of International Finance.

All three major US stock indexes have been on an extended rally this year, repeatedly setting new record highs, as investors anticipate expanded business activity thanks to a lighter regulatory road and potential tax cuts.

Fink spoke during a panel discussion alongside the ceos of JPMorgan and Morgan Stanley - Jamie Dimon and James Gorman. All three were generally optimistic about the economy, although they highlighted several significant risks.

Fink said there is no evident economic reason for a major spike in volatility in the near future. "Over the long horizon, I think the world is a great place to be," he said.

But all three ceos found ample room to criticise the White House and the US Congress for failing to take any major steps to boost that nation's economy.


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