RIO DE JANEIRO, BRAZIL – For Larry Fink, CEO of BlackRock, the world’s largest asset manager, Latin America will be one of the regions that will benefit the most from the geopolitical conflict in Ukraine. Meanwhile, he projected a good scenario for Europe as it becomes less dependent on Russia for energy.
It is not only Larry Fink’s traditional annual letter to investors that gets the market’s attention. The BlackRock CEO’s presentations are followed by analysts, especially in times of war.
Yesterday, he participated in the BlackRock seminar called “Latin America Virtual Forum 2022” and assured that the conflict between Russia and Ukraine is reordering the world. According to Fink, it could generate a promising future for sectors that are currently affected.
“I think Europe will be better off because it will become less dependent on Russia. They are now going to take responsibility for building their defense, much greater responsibility for their energy independence, and most importantly, they will rely on multiple sources of energy,” he explained, indicating that this will reconfigure supply chains.
“After the breakup of the Soviet Union, we were able to create a more deflationary, much more efficient, higher productivity world. Now there will be more companies focusing on changes in supply chains so that they are not dependent,” he added.
While he stressed that these measures would be accompanied by higher inflation in the short term, they could be deflationary in five or six years as higher capacity roads are built.
“I’m not a big believer that, if we have a global recession, or in Europe, it will be very long. It will be short-legged because of all the fiscal stimulus coming in,” he added.
“Markets are the main drivers of all countries today, and those trying to develop, having access to capital in the markets is really critical,” he said.
“As I wrote in the letter, access to capital markets is not a right; it is a privilege,” he said.
WINNERS AND LOSERS
For Fink, one of the regions that will benefit from the “new world order” will be Latin America, which could generate a revaluation of how the world identifies “big winners and losers.”
“We have seen big impacts, whether in semiconductors, the energy market, or staple foods. All the companies are asking us, how do we minimize dependencies? I think this is really important for Latin America,” he explained.
“If Brazil, Mexico, Colombia, and others focus and say ‘we are open for business,’ we are going to see more companies close to nearshoring (outsourcing services with companies in a nearby country) or onshoring (buying services abroad) demand. I think Mexico is a big beneficiary if it works toward that goal because of its geographic proximity to the US,” he added.
Fink concluded that “we probably witnessed the greatest example of stakeholder capitalism” in the face of the response of private companies to leave Russia because of the geopolitical conflict and the scope that Western sanctions will have.
“These companies have moved out of Russia so quickly. That is the greatest example of stakeholder capitalism, where you listen to your shareholders and work together with your employees and your customers. As a result, I think these companies will be better off,” he added.