By James Glynn
SYDNEY – The world's largest investment manager BlackRock has warned of further deterioration in the geopolitical environment for financial markets in 2024, adding that asset markets are not fully recognizing the risks.
“We expect greater fragmentation, increased competition and less cooperation between major nations in 2024,” BlackRock said in a note to clients.
“But as broad equity markets and other assets rapidly move away from geopolitical events, we fear they may not recognize that we have entered a new geopolitical regime. In our view, the old playbook no longer applies,” she added.
The warning comes as the Dow Industrials closed above 38,000 for the first time on Monday, while the S&P 500 also hit another record close.
“The economic and market impact of geopolitical fragmentation will depend in part on whether changes in the global order occur in a controlled or disorderly manner,” BlackRock said.
BlackRock's assets under management rose to $10 trillion in the fourth quarter, beating analysts' expectations.
The investment group reiterated its highest rating on Gulf tensions, saying the risk of escalation was high.
“The disruption to Red Sea shipping attempting to pass through the Suez Canal shows how the conflict can escalate to hamper supply chains and drive up production costs, in this case through rising shipping costs,” it continued.
BlackRock also maintains a high level of strategic competitive risk between the US and China.
“Taiwan remains a major trouble spot, as recent elections demonstrate. We believe intense, structural competition between the US and China is the new normal, particularly in defense and technology,” the investment firm added.
Write to James Glynn at [email protected]
(END) Dow Jones Newswires
January 22, 2024 7:05 p.m. ET (00:05 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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