BlackRock Says Trade War Shouldn't Scare Investors From China

(Bloomberg) -- An escalating trade war between the U.S. and China shouldn't scare long-term investors in the region because economies tend to adjust to such tensions, according to BlackRock Inc. executives.

“It's that adjustment that's painful,” Mark Wiseman, global head of active equities, said Wednesday at a press briefing in New York. “If you take a 10-year view on the Chinese economy, from an economic perspective it will smooth itself out.”

President Donald Trump has threatened to impose tariffs on an additional $200 billion of Chinese goods. If the administration sees it through, stocks could drop 10 percent to 15 percent, BlackRock Chief Executive Officer Larry Fink said earlier this week.

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China's economy is experiencing a historic opening to the rest of the world. More than 200 Chinese large-cap domestic stocks gained inclusion to emerging-market indexes from MSCI Inc. after being denied entry for years with the government's tight grip on its financial markets. The inclusion of these A shares, previously only available to Chinese investors, is a mark of mainstream financial legitimacy.

Greater alternative investment opportunities may arise in real estate, private equity and private credit in China, Wiseman said.

Index inclusion in many emerging markets “strengthens the recognition of public market multiples,” said Martin Small, head of U.S. iShares, the asset manager's exchange-traded fund business. “Public market multiples are really important to how people think about making allocations in private markets, particularly in private equity.”

BlackRock's total assets under management were $6.3 trillion as of June 30.

To contact the reporter on this story: Annie Massa in New York at amassa12@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Mary Romano, Dan Reichl

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