BlackRock’s Larry Fink warns that Russia’s invasion of Ukraine will further boost inflation by rebuilding the global economy and encouraging businesses to withdraw from the global supply chain.
“Russia’s invasion of Ukraine has put an end to the globalization it has experienced over the last three decades,” Fink wrote in a letter to BlackRock’s shareholders, who oversee $ 10 trillion as the world’s largest asset management company. I am writing.
The immediate result was a complete isolation from the Russian capital markets, but Fink predicted: This could allow companies to move more of their business to land or coast, resulting in faster withdrawal from some countries. “
“A major shift in the supply chain is essentially inflation,” Fink wrote in a broad 10-page letter that also covered the impact of energy shifts and cryptocurrency intrusions with BlackRock’s business line. Updated investors on reopening of its main office.
The letter did not mention the specific countries affected by the shift, but Fink wrote that “manufacturing sites in Mexico, Brazil, the United States, or Southeast Asia could benefit.” Other investors claim that BlackRock could use the last group instead of China, which launched a series of retail investment products last year.
Fink advocates companies that BlackRock is investing in to do more to deal with climate change. His letter predicted that Russia’s aggression would affect the transition to cleaner energy.
Initially, looking for alternatives to Russia’s oil and natural gas “will inevitably slow the world’s progress towards net zero. [emissions] In the short term, “he wrote.
“In the long run, I believe recent events will actually accelerate the shift to more environmentally friendly energy sources,” he wrote.
Climate change activists want investors to eliminate fossil fuels altogether, but Fink rejected this approach, as in a letter to CEO in January. “BlackRock continues to work to help clients navigate the energy transition, including continuing to work with hydrocarbon companies,” he writes. .. “Fossil fuels such as natural gas are important as transition fuels to ensure affordable energy price continuity during the transition.”
In one of his first comments on cryptocurrencies, Fink noted the “potential impact on the acceleration of digital currencies” in the Ukrainian war. .. .. A carefully designed global digital payment system can enhance payments for international transactions while reducing the risk of money laundering and corruption. “
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He told investors that BlackRock is studying digital currencies and the underlying technology because of the growing interest of clients.
Fink communicated with shareholders this year over a solid start in the financial markets, where BlackRock’s share price has fallen by nearly 20%. “I share your disappointment with the past performance of our stock. But we faced a difficult market before. And we are always better and better on the other side. I’m ready, “he writes.
He also said the company was out of “the strongest organic growth in history” in 2021 when the booming market and growing interest in alternative assets and exchange-traded funds led to a net inflow of $ 540 billion. Said.
Looking to the future, Fink revealed that BlackRock wants employees to return to the office, but is not included in employers claiming a full return to pre-pandemic norms. “For the future of BlackRock, cooperation, cooperation and direct human development are essential,” he writes. “There are certain conversations that video Hangouts can’t reproduce … We lose the space, creativity, and emotional connection that comes from meeting in person.”
“At the same time, we recognize that the pandemic has redefined the relationship between employers and employees. The flexibility to work from home for at least some of the time to retain and attract best-in-class diverse talent. You need to maintain your sex, “he said.