BlackRock expresses caution towards Chinese equities amid COVID lockdown concerns

Yahoo Finance's Ines Ferré discusses BlackRock cautioning on China stocks.

Video transcript

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AKIKO FUJITA: Well, BlackRock, the world's largest asset manager says, it is cautious on the longer term outlook for Chinese stocks. Despite sentiment towards the market becoming more optimistic, China's central bank has cut the amount of cash lenders must hold in reserve for the second time this year, as COVID cases continue to weigh down on the country's recovery efforts. Let's bring in Yahoo! Finance's Ines Ferré, who's tracking more of the market reaction and what's playing out over in China. Ines.

INES FERRÉ: Yeah, Akiko, and as we can see, Chinese equities right now are under pressure, as you guys were talking about those COVID lockdowns, the restrictions, and the COVID cases-- the amount of COVID cases in China. So our YFi Interactive board shows that you've got Alibaba down 3%. You've got JD.com down more than 5%.

I'm gonna pull up, though, a one-month chart because over the last month we did see these Chinese ADRs really rallying quite a bit. You did have some positive notes from Bank of America, Citi, Morgan Stanley. So some bullish notes about Chinese equities going into 2023.

But as you were mentioning, BlackRock, the asset manager, coming out with a note, being cautious on Chinese equities. And this is a notable change from what we've seen with other Wall Street commentary recently, as I just mentioned. And part of this has to do with two things that they mentioned in their note-- or two main points I should say.

Geopolitics remaining a key risk. And also the emphasis on ideology compared to years past and how that poses, quote unquote, "an adverse climate" for foreign investors and privately-held firms.

Now, I should note that while BlackRock is apprehensive about Chinese equities, they do say that there could be a surprise to the upside. And that would be if the property sector stabilizes and also if COVID restrictions, if those ease even more, guys.

RACHELLE AKUFFO: All right, thanks, Ines.