Fink Prods China With ‘Assertive’ Disclosure Demands

(Bloomberg) -- BlackRock Inc. is pressing for greater openness in China’s financial system, as global investors move more money into the country, Chief Executive Officer Larry Fink said.

“We need more disclosure, we need more transparency at every corporate level, if we’re going to own those companies’ shares,” Fink, 68, said in a CNBC interview Wednesday after his New York-based company announced third-quarter results. “We have been very assertive, how China should be moving forward, how they should be opening up their capital markets.”

Fink’s comments underscore the balancing act Wall Street CEOs face with China. The financial opening of the world’s second-biggest market has lured businesses, but political tensions with the U.S. -- as both Democrats and Republicans show hostility to closer ties -- has increased pressure on firms to show they’re not kowtowing to Beijing. 

BlackRock this year won approval to operate a wholly owned mutual-fund business in China.

Also Wednesday, BlackRock said its assets under management fell slightly in the third quarter, to $9.46 trillion, though investors added a net $98 billion its long-term funds. Overall net inflows were $75.3 billion, it said in a statement.

Long-term sustainable flows were $32 billion in the third quarter, a record. BlackRock has seen $79 billion head into the offerings so far this year, up from $64 billion in all of 2020 and $33 billion in 2019.

“Sustainable investing (also called ESG investing) has emerged as meaningful source of growth for BlackRock,” said Kyle Sanders, an analyst at Edward Jones, said in a note after the earnings. “BlackRock’s strong commitment to ESG in recent years gives the firm a firm mover advantage to capitalize on this high-growth opportunity.” 

The firm’s exchange-traded funds took in a net $58 billion, with assets totaling $3 trillion. 

Adjusted earnings were $10.95 a share, beating the average estimate of $9.39 by 11 analysts in a Bloomberg survey. Revenue was $5.05 billion, up 16% from the prior year and ahead of consensus estimates of $4.84 billion. 

BlackRock rose 2.5% at 9:51 a.m. in New York trading. The shares have gained 16% this year through Oct. 12.

The results show that the world’s largest asset manager continues to attract money even as equity markets declined in September, denting returns for the third quarter. 

“The strong asset flows amid market headwinds illustrates that BlackRock is capitalizing on powerful shifts occurring in the asset-management industry,” Sanders said in his note.

The S&P 500 index rose 0.2% in the period, with investors confronting the spread of Covid’s delta variant amid worries over higher inflation. 

Crypto Opportunities

Fink also said Wednesday that he believes digital currencies are likely to become commonplace and benefit consumers.

“I see huge opportunities in a digitized crypto blockchain related currency, and that’s where I think it’s going,” he said on CNBC. There’s a “a huge role for a digitized currency, and I believe that’s going to help consumers worldwide.” 

Fink sounded less certain that investing in cryptocurrencies will be as beneficial.

“I love the fact that people are looking to invest in different things,” he said. “Whether this is going to play out well in the long run, we’ll see.”

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