The Worlds Largest Capital Management Company Enters Defense Mode: Increasing Cash Holdings

category:Finance
 The Worlds Largest Capital Management Company Enters Defense Mode: Increasing Cash Holdings


Many Asian countries are committed to promoting structural reforms, such as the results of recent elections in India and Indonesia, which are conducive to the continuation of the reform process of the previous government, so we are still optimistic about the long-term prospects of the Asian risky asset market. BlackRock believes that.

Based on the above changes in the macro environment, BlackRock has reduced the risk exposure of its portfolio and adopted a more defensive strategy. For example, in the stock portfolio, cash holdings have been increased, the proportion of technology stocks vulnerable to macro-environmental impacts has been reduced, and defensive sectors such as utilities, health care and telecommunications have been increased. For defensive reasons, it also adjusted its original attitude towards the increase of Chinese stocks.

As for credit bonds, it reduces the overall risk and invests in high-quality investment-grade bonds and high-yield bonds, while focusing on large enterprises with better resilience and stable and predictable cash flows in the economic turnaround.

Looking back on 2018, BlackRock said, corporate earnings growth was still motivated. But now, due to the uncertainty of economic growth and supply chain pressure, downside risk has become the dominant factor in the market.

Although yields on U.S. Treasuries have fallen to multi-year lows, they remain attractive. Even if yields are so low, we think that fixed income assets provide a ballast in our portfolio, which is a protective mechanism, Boivin said, noting that he also likes emerging market bonds.

Economic growth in the United States will slow down, with growth of about 1.8% in the second half of the year. The central bank is creating a benign environment. We dont think the risk of recession will be relevant this year. Based on this, the next few months are really quite constructive for the market, he said.

Not only BlackRock, Morgan Stanley also downgraded the global stock market rating from neutral to downgraded.

The most direct reason for downgrading global stock markets is that asset yields are too low. Morgan Stanley believes that in the past 12 months, the average upward margin of the S&P 500 index, the MSCI European Stock Market Index, the MSCI Emerging Market Index and the Topix Japanese Stock Index relative to Morgan Stanleys target price has been only 1%. If the target price is neglected, the rate of return on investment is predicted based on the current valuation, and the adjusted upward margin is only 3%.

Morgan Stanley analysts, including Andrew Sheets, chief cross-asset strategist, wrote in a July 7 report that profit estimates remain too optimistic as global manufacturing indicators continue to deteriorate. They said market expectations for the Fed to ease monetary policy were high, leaving little room for a boost to the already rising stock market.

Morgan Stanley speculates that although the Fed may cut interest rates this month and the ECB may launch a new round of quantitative easing, the positive effects of these easing monetary policies may be offset by the negative effects of a slowdown in global economic growth. Meanwhile, the Andrew Sheets team said they had seen two catalysts for the recent downturn: weakening liquidity in the second quarter and summer. Major listed companies will issue second-quarter financial reports one after another. Morgan Stanley believes that the market is not sufficient for listed companies to reduce the expected pricing of the annual profit guidelines for too many reasons, including the continued decline in global PMI indicators, the largest monthly decline in the Morgan Stanley Business Environment Index in June, and the unstable Global trade situation. We believe that all of this portends risks for the stock market. Source: Yang Bin_NF4368, Responsible Editor of Peng Mei News

Meanwhile, the Andrew Sheets team said they had seen two catalysts for the recent downturn: weakening liquidity in the second quarter and summer.

Major listed companies will issue second-quarter financial reports one after another. Morgan Stanley believes that the market is not sufficient for listed companies to reduce the expected pricing of the annual profit guidelines for too many reasons, including the continued decline in global PMI indicators, the largest monthly decline in the Morgan Stanley Business Environment Index in June, and the unstable Global trade situation.

We believe that all of this portends risks for the stock market.