Blackrock warns on equity valuations

World’s biggest asset manager BalckRock is warning against equities, calling the valuations do not look cheap given the risks ahead.

“Equities no longer look cheap. The MSCI World Index is up 14% from its mid-February low, as stocks have shaken off fears of a global recession, an oil-price collapse and a Chinese currency devaluation.”

It cited possibility of FED hike this summer as one of the reasons behind its call.

“Higher US inflation and hawkish Fed comments have now put a summer rate increase back on the table, increasing investor anxiety and the likelihood of near-term volatility.”

According to BlackRock’s global chief investment strategist Richard Turnhill, there are high risks ahead including FED hike this summer –

• British exit from European Union
• Worsening of European Refugee crisis
• Disappointing global growth
• Faster rate hikes from FED

However, the asset manager still prefers equities to bonds but downgraded European and U.S. equities from Overweight to Neutral.