George Soros, billionaire and founder of Soros Fund Management LLC, pauses as he speaks at an event on the third day of the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, January 23, 2020.
Simon Dawson | Bloomberg | Getty Images
LONDON – BlackRock, the world’s largest asset manager, has responded to strong criticism from billionaire investor George Soros about the firm’s investments in China.
Writing in the Wall Street Journal on Tuesday, Soros described BlackRock’s initiative in China as a “tragic mistake” that “would harm the national security interests of the U.S. and other democracies.”
The opinion, titled “BlackRock’s China Blunder,” said the company’s decision to dump billions into the country was a “bad investment” that will likely lose money for its customers.
It comes shortly after BlackRock launched a set of mutual funds and other investment products for Chinese consumers. The initiative made BlackRock the first foreign-owned company to operate a wholly-owned company in China’s mutual fund industry.
The asset manager told CNBC on Wednesday that its investment fund subsidiary in China created its first fund in the country after raising 6.68 million Chinese yuan ($ 1.033 billion) from more than 111,000 investors.
“The United States and China have a broad and complex economic relationship,” a BlackRock spokesman said in response to Soros ’comments.
“Total trade in goods and services between the two countries topped $ 600 billion by 2020. Through our investment activity, U.S.-based asset managers and other financial institutions contribute to the economic interconnection of the two. largest economies in the world “.
The BlackRock Investment Institute recommended in mid-August that investors increase their exposure to China up to three times in some cases. Earlier this year, CEO Larry Fink, in a letter to shareholders, described the Chinese market as a “significant opportunity to help achieve long-term goals for investors in China and internationally.”
A sign from BlackRock Inc. hangs over his building in New York.
Lucas Jackson | Reuters
“The vast majority of assets that BlackRock manages are for retirement. BlackRock customers around the world (including many in the U.S.) are looking for a wide range of investments, including China, to achieve their retirement and other financial goals. “, said the spokesman.
BlackRock added that it believes it can help China cope with its growing retirement crisis by providing experience, products and services in retirement systems.
“We believe that integrated global financial markets provide people, businesses and governments in all countries with better and more efficient access to capital that supports economic growth around the world.”
“The situation is completely different now”
Soros said Tuesday that BlackRock’s investments in China showed that the company seemed to “misunderstand” Chinese President Xi Jinping.
Beijing has cracked down on several companies this year, leading to strong sales of Chinese stocks. Soros warned that while new rules were designed to target technology companies, they should also be seen as a sign that Xi will do whatever it takes to stay in power.
“Previous efforts could have been morally justified by claims that they were building bridges to bring countries closer together, but the situation is now totally different,” Soros said. “Today, the United States and China are engaged in a dead-end conflict between two systems of governance: repressive and democratic.”
Writing for the Financial Times in an independent publication published on August 30, Soros said China’s investors in Xi are facing a “wake-up call,” before adding that Xi’s crackdown on the company private demonstrated that it “does not understand the market economy.”
BlackRock reported on July 14 that its assets under management amounted to a record $ 9.49 trillion in the second quarter, up from $ 7.32 trillion the previous year.
BlackRock shares have risen more than 28% to date.