Technological and AI developments, advances in health care and the greater societal need for retirement benefits across the globe present huge opportunities, BlackRock CEO Larry Fink said at a special meeting on global growth convened by the World Economic Forum.
Fink, also chair of the $10.47 trillion global money management firm, said the amount of innovation that we are witnessing right now has created a “very large investment cycle.”
Advancement in medical research, such as weight-loss drugs, is “very expensive and inflationary in the short run but in the long run is deflationary.” Medical advances, along with the investment needs related to artificial intelligence, “in my mind create a very solid investment foundation,” Fink said during a panel discussion at the WEF’s Special Meeting on Global Collaboration, Growth and Energy for Development, held April 28 and 29 in Riyadh, Saudi Arabia.
Fink’s session — during which he presented alongside panelists that included Salman F. Rahman, private industry and investment adviser to Bangladesh’s prime minister — addressed “investing amid global fracture.”
While Fink is “bullish” on opportunities right now, he acknowledged that it does come during global fractures — rising geopolitical issues, a rebalancing of trade and elevated inflation — and the panel considered the current and growing divide between developed and emerging markets.
Fink and Rahman agreed that the role that global development banks play in helping the “global south” — the emerging world —prosper needs a rethink if there is to be more balance. “We need to really look at how we are going to be providing new capital to the emerging world, and that’s one of the big problems … facing the world today,” Fink said.
Rahman said: “We need to actually look at restructuring the global order, the global economic order, the social political order. At the moment, the divide between the north and south is increasing, and it is increasing quite rapidly. If we don’t … take steps to address this issue, then I fear that in the future you are going to have a very, very seriously divided world — especially with the advent of technology.”
The panel turned to social impact, with Fink outlining investments in the “emerging south” and other strategies such as decarbonization but reiterated that “beyond those specified projects that we’re working on, the $10.5 trillion that we’re responsible for, our responsibility is financial returns.”
But the key, he said, is “making sure we have more and more investors focusing on different opportunities that empower the global south, to try to find more opportunities to lift more of the world.
“The biggest social impact we could have — and we’re working on this in India, and we’re going to be working on it in many other countries — is to start building a retirement system.” There is an opportunity for BlackRock to work with governments to start their own Pillar 3 systems for their own self-directed retirement pool — something that can have “profound impact” once they are up and running.
One of the major drivers of foreign capital invested into the U.S. is its capital markets, Fink said.
“Our job — and this is where we play a big social service instead of trying to direct money — is to be working with governments to try to develop their own retirement system. And when you can develop a strong direct investment retirement system, through that mechanism you then build a broader capital market. It takes years and years to do that, but a broader capital market will then allow more foreign direct capital to come in, because there’s more liquidity.
“So to me, from our position and what we’ve seen, we can play the biggest social purpose at BlackRock if we could help more countries lift up their retirement system, to build a direct retirement system that will then over years and years build up their capital markets.”