Investors are facing a considerable amount of uncertainty thanks to slowing economic growth, technological disruption, and social and geopolitical instability, BlackRock Chairman and CEO Laurence D. Fink said in his annual letter to shareholders Monday.
Mr. Fink described central banks adopting negative interest rates in an attempt to spark economic growth as “particularly worrying.”
Mr. Fink wrote the actions of the central banks “are severely punishing the world's savers and creating incentives to reach for yield, pushing investors into less liquid asset classes and increased levels of risk, with potentially dangerous financial and economic consequences.”
He went on to explain that markets are still processing the “dramatic shift” in energy costs as both technology and geopolitics have transformed supply. Apart from its effect on energy prices, technology is continuing to disrupt several industries “and even societies as it reshapes global employment markets.”
Mr. Fink also noted that electoral politics is contributing to global market uncertainty. He cited polarizing elections in the U.S. and Germany; government transitions in Spain, Taiwan and Canada; allegations of scandal in Brazil; and the U.K. vote in June on whether to leave the European Union as factors that will “continue to drive volatility.”
“In such a hostile landscape, our mission for investors has never been more vital, nor the responsibility we feel to clients stronger,” Mr. Fink wrote. “We believe the trust that clients place in us must be earned every day, and that's why we remain committed to constant improvement and reinvention.”