Christine Chen from Sydney reports that BlackRock, the global leader in asset management, announced on Thursday that it’s contemplating a shift in investment strategy away from Australia. This move comes in response to inflated asset valuations and tepid growth, prompting the firm to explore more promising markets, notably the U.S. and Japan.
Katie Petering, who spearheads BlackRock’s multi-asset investment strategy across Australia and New Zealand—overseeing nearly $100 billion on behalf of clients—remarked that given the current unpredictable global scenario, the firm is reevaluating its strategic asset allocation. The goal is to make tactical decisions that diversify and strengthen its portfolio.
Speaking at a media roundtable in Sydney, Petering commented, “We’re navigating a landscape fraught with volatility and uncertainty. As multi-asset investors, our aim is to incorporate elements in the portfolio that provide stability.”
BlackRock has expressed a “pro-Japan” sentiment, citing recent corporate reforms and inflationary trends that have strengthened the pricing power of companies there. The firm is also inclined towards U.S. equities.
On the flip side, BlackRock views Australian assets as overvalued, driven by sluggish economic growth and a sustained period of elevated interest rates. Petering explained, “In Australia, valuations appear stretched, and the growth outlook isn’t as robust compared to other nations. That’s something we’re taking into account.”
The firm’s portfolio in Australia currently includes investments in major players like BHP, CSL, and the Commonwealth Bank of Australia, as detailed on its website.
In a recent development, the Reserve Bank of Australia (RBA) reduced its cash rate from its 13-year high of 4.35% down to 4.10%. While acknowledging progress on inflation, the bank remains cautious about further easing of monetary policy.
BlackRock endorses the RBA’s careful approach, especially amidst a constrained labor market and geopolitical tensions stirred by the Trump administration’s tariff threats.
Craig Vardy, BlackRock’s Australasia head of fixed income, pointed out, “The RBA’s main challenge lies in the labor market. The 4% unemployment rate is certainly giving them pause.” He noted that this situation diminishes the likelihood of additional interest rate cuts to propel growth for Australian households.
(Story edited to expand on job roles in paragraph 2; Reported by Christine Chen in Sydney; Edited by Jamie Freed)
