BlackRock has confirmed it will be creating a hub of emerging markets investment talent in Hong Kong, alongside the restructuring of its US business, as reported on 29 March.
That change, affecting some $30bn of AUM, will chiefly affect US-based business involving use of quantitative strategies instead of human stockpickers.
However, the manager has also confirmed that there will be a repositioning of global emerging markets business. In this, Belinda Boa has become CIO for Global Emerging Markets and Andrew Swan head of Asian Equities and Global Emerging Markets, expanding both their roles. And portfolio manager Gordon Fraser is relocating to Hong Kong from London. Boa and Swan have ties to Hong Kong already.
BlackRock has has 25 offices throughout the Asia-Pacific region, including 287 investment specialists in equities, fixed income, multi-asset, alternatives and ETFS, according to information on its website for Asia.
Recently, on 2 March, the company announced that China’s State Administration of Foreign Exchange had awarded a Renminbi Qualified Foreign Institutional Investor quota of RMB11bn ($1.6bn) to subsidiary BlackRock Fund Advisors, to invest in domestic capital markets, “the first…awarded to any asset manager in the US”. BlackRock’s total RQFII quota therefore rose to some RMB35.1bn ($5.1bn). The manager added that “certain iShares ETFs may utilise this additional RQFII quota.”
The global emerging markets sector, for both active and passive investing, is expecting a boost from broader inclusion of Chinese onshore capital markets in key indices such as the MSCI Emerging Markets index. China is present among the 23 constituents of this key benchmark, but its weighting is deceptive in that this does not include domestically listed stocks, A shares, to the same extent. MSCI in June 2016 rejected broader inclusion of A shares, however, when this does happen, it is expected to result in a significant shift in allocation among investors, particularly emerging market investors.
Noting this in respect of the RQFII announcement, Mark Wiedman, global head of iShares and Index Investing, said: “The first US RQFII quota is a milestone for BlackRock and our iShares ETFs. We move closer to our goal of offering more direct Chinese stock and bond exposure in iShares to clients anywhere in the world.”
BlackRock suggested in its statement on changes to its US business that big data would play an increasing role in its activities, as it seeks to provide alpha while cutting costs. This trend is likely to result in nodes of research capabilities, including that required to support the build-out of its Hong Kong based global emerging markets capabilities.