Manufacturing hubs in southeast Asia could stand to benefit; Boss of $10tn asset manager warns on inflation as companies reconfigure supply chains
Russia’s invasion of Ukraine will reshape the world economy and further drive up inflation by prompting companies to pull back from their global supply chains, BlackRock’s Larry Fink has warned.
“The Russian invasion of Ukraine has put an end to the globalisation we have experienced over the last three decades,” Fink wrote in his annual chairman’s letter to shareholders of BlackRock, which oversees $10tn as the world’s largest asset manager.
While the immediate result has been Russia’s total isolation from the capital markets, Fink predicted “companies and governments will also be looking more broadly at their dependencies on other nations. This may lead companies to onshore or nearshore more of their operations resulting in a faster pull back from some countries.”
“A large-scale reorientation of supply chains will inherently be inflationary,” Fink wrote, in a wide-ranging 10-page letter that also addressed the invasion’s effect on the energy transition and cryptocurrencies, and updated investors on BlackRock’s business lines and the reopening of its main offices.
The letter did not mention any specific country that would be hurt by the shifts, but Fink wrote that “Mexico, Brazil, the United States, or manufacturing hubs in southeast Asia could stand to benefit”. Other investors have argued that the last group could substitute for China, where BlackRock last year launched a set of retail investment products.
