World's No.1 Asset Management CEO: "Russia's Invasion of Ukraine Marks the End of Globalization"

Pink CEO Reveals in Annual Shareholder Letter "Supply Chain Restructuring Causes Inflation"
"Accelerating Green Energy Transition... Benefits for US, Mexico, Brazil, and Asian Manufacturing Countries"

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] Larry Fink, CEO of BlackRock, the world's largest asset management company managing $10 trillion (approximately 1,223.5 trillion KRW) in assets, declared that globalization has ended due to Russia's invasion of Ukraine.

According to major foreign media on the 24th (local time), CEO Fink warned in a 10-page annual shareholder letter that Russia's invasion of Ukraine will reshape the global economy and cause companies to withdraw from existing supply chains, thereby stimulating inflation. He asserted, "Russia's invasion of Ukraine has ended the globalization experienced over the past 30 years."

CEO Fink diagnosed that Russia will be completely isolated from capital markets due to this war. He also anticipated that companies and governments will more broadly examine their dependence on other countries. As a result, companies will locate their operations domestically or in nearby foreign countries to reduce dependence on other nations, which ultimately means companies withdrawing from overseas markets. CEO Fink explained that such large-scale supply chain restructuring is inherently a factor that increases inflationary pressures.

CEO Fink predicted that this supply chain restructuring will greatly benefit major manufacturing countries such as Mexico, Brazil, the United States, and key Southeast Asian nations. He did not specifically mention countries that would suffer damage.

CEO Fink also expected that the war between Russia and Ukraine will accelerate green policies in the long term. He anticipated that in the short term, the process of approaching carbon neutrality goals may be delayed due to the need to find substitutes for Russian crude oil and natural gas. However, in the long term, it will accelerate the green era, explaining that the rise in fossil fuel prices decisively enhances the competitiveness of green energy.

BlackRock has recently been reducing investments in the fossil fuel sector. However, CEO Fink previously stated in a January shareholder letter that he opposes completely stopping fossil fuel investments. At that time, he explained that fossil fuels such as natural gas are necessary to maintain energy prices at reasonable levels during the transition from fossil fuels to green energy, describing natural gas as an important transitional energy. He also stated that BlackRock will continue to be dedicated to helping clients who emphasize energy transition.

In this shareholder letter, CEO Fink mentioned cryptocurrencies for the first time. He noted that the impact of this war on accelerating digital currencies is noteworthy, diagnosing that a carefully designed digital payment system can expand international transaction settlements and reduce risks of money laundering and corruption. He stated that because client interest is growing, BlackRock is also studying digital currencies and related technologies.

CEO Fink apologized for BlackRock's stock performance showing a sluggish trend amid increased financial market uncertainty this year. BlackRock's stock price has fallen nearly 20% this year. However, CEO Fink emphasized, "BlackRock has always navigated difficult market conditions well in the past and has also prepared well for when the market improves again."