Shares will rebound in 2021, however not as strongly as final 12 months
BlackRock’s Larry Fink told CNBC on Thursday he believed the stock market had headroom, but the world’s largest wealth manager warned the rally may not be as robust as it was in the second half of 2020.
“I think we will continue to see the market strong through 2021, probably not as strong as in the fourth or third quarter of last year,” BlackRock chairman and CEO told Squawk Box.
The S&P 500 rose more than 20% from July 1 to December 31, amid a massive rally in stocks following the coronavirus sell-off in February and March caused by the pandemic.
One factor that should give the market a tailwind is the record amount of cash investors on the sidelines, said Fink.
“We see time and time again that investors around the world are underinvested, not overinvested in long-term assets. The best source of long-term assets is stocks and many types of private assets,” he said.
The presence of low interest rates – and the likelihood that accommodative monetary policy will last for a while – will continue to bring investors to the market, according to Fink.
Fink expects the second half of 2021 to be stronger than the first half of the year due to the widespread introduction of Covid vaccines to the market, allowing more economic activity to resume. That will be “a strong component for forward growth,” he said.
BlackRock’s shares were under pressure in premarket trading Thursday after the New York-based company reported better-than-expected earnings and sales in the fourth quarter.
BlackRock’s assets under management rose to a record $ 8.68 trillion at the end of the quarter. That’s an increase of $ 7.43 trillion over the same period last year.