Black­rock now fa­vors US stocks, cuts outlook on Ja­pan

The Pak Banker - - COMPANIES/BOSS -

NEW YORK: Black­Rock Inc (BLK.N) is up­grad­ing its view of U.S. stocks and cutting an ear­lier rec­om­men­da­tion to in­vest in Ja­panese stocks, ac­cord­ing to a note the com­pany dis­trib­uted on Thurs­day. Black­Rock, the world's largest as­set man­ager, raised its outlook for U.S. stocks given what the com­pany de­scribed as the "re­siliency" of the world's largest econ­omy. "Over­all, we are op­ti­mistic and be­lieve mod­est eco­nomic growth is ahead," the note said. "To­gether with stronger-than-ex­pected in­fla­tion mea­sures, the econ­omy ap­pears to be tak­ing global un­cer­tain­ties in stride, and fears of an ap­proach­ing re­ces­sion could be some­what overblown."

In the same note, Black­Rock cut an ear­lier rec­om­men­da­tion fa­vor­ing Ja­panese stocks, say­ing mar­ket tur­bu­lence and a strong yen may erode earn­ings of the coun­try's ex­porters.

"Mar­ket volatil­ity has surged since the Bank of Ja­pan's (BOJ's) an­nounce­ment of neg­a­tive in­ter­est rates in late Jan­uary, and a sig­nif­i­cantly stronger yen is rais­ing down­side risk to ex­porter earn­ings," the New York-based com­pany said in the un­signed note. "The fi­nan­cials sec­tor is likely to come un­der greater pres­sure should in­ter­est rates move deeper into the neg­a­tive." Last month, Black­Rock strate­gist Russ Koes­terich de­scribed Ja­panese stocks as cheap and "over­sold," say­ing a move by the BOJ to lower rates would likely weaken the yen and strengthen the coun­try's stock val­ues.

That Feb 12 call ended up be­ing pre­scient. Ja­pan's widely watched Nikkei index .N225 rose about 13 per­cent since then. Year to date, the index is off by more than 11 per­cent. Black­Rock also added a rec­om­men­da­tion fa­vor­ing bonds in de­vel­oped mar­kets out­side the United States given what it said was a halt in the ap­pre­ci­a­tion of the U.S. dol­lar. The fund man­ager re­duced its outlook on stocks in the United King­dom given un­cer­tainty ahead of the coun­try's June 23 ref­er­en­dum on whether to re­main in the Euro­pean Union.

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