BlackRock Reevaluates Australian Investments Amid Valuation Concerns and Weak Growth

BlackRock Reassesses Australian Exposure Amid Stretched Valuations, Weak Growth

BlackRock, the world’s largest asset manager, is considering shifting its focus away from Australia due to stretched valuations and weak growth, seeking better opportunities in markets like the U.S. and Japan. Katie Petering, who leads BlackRock’s multi-asset investment strategy in Australia and New Zealand, stated that an uncertain global outlook has prompted the firm to reassess its strategic asset allocation and make tactical decisions to diversify its portfolio.

“We’re in an environment where there’s a lot more uncertainty and volatility. So as multi-asset investors, we try and build items in the portfolio that give ballast to the portfolio,” Petering explained during a media roundtable in Sydney.

BlackRock has expressed a “pro-Japan” stance due to recent corporate reforms and inflation, which have bolstered companies with pricing power. The firm is also overweight on U.S. equities. In contrast, Australian asset valuations have become stretched by weak economic growth and a prolonged period of high interest rates.

“In Australia, one thing that we’re looking at is that the local market has probably stretched valuations and there’s probably not as strong a growth outlook as other countries. So we’re considering that,” Petering added.

BlackRock’s Australian share investments include major companies such as BHP, CSL, and the Commonwealth Bank of Australia. Last week, the Reserve Bank of Australia reduced its cash rate from a 13-year high of 4.35% to 4.10%, citing progress on inflation but remaining cautious about further monetary policy easing.

BlackRock supports the central bank’s cautious stance amid a tight labor market and geopolitical uncertainty caused by the threat of the Trump administration’s tariffs. Craig Vardy, BlackRock’s Australasia head of fixed income, noted that the main risk for the RBA is around the labor market, with the 4% unemployment rate causing concern.

“The main risk for the RBA is definitely around the labor market … that 4% unemployment rate obviously is causing them a bit of consternation,” Vardy said. This would reduce the prospect for more rate cuts to stimulate growth for Australia’s households, he added.