By Christine Chen
SYDNEY (Reuters) - BlackRock, the world's largest asset manager, said on Thursday it was considering shifting focus away from Australia due to stretched valuations and weak growth, eyeing better opportunities in other markets like the U.S. and Japan.
Katie Petering, who leads BlackRock's multi-asset investment strategy in Australia and New Zealand where it manages nearly $100 billion for clients, said an uncertain global outlook meant it was reassessing its strategic asset allocation and making tactical calls 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," she told reporters at a media roundtable in Sydney.
BlackRock said it was "pro-Japan" due to recent corporate reforms and inflation, which helped companies with pricing power, while also being overweight on U.S. equities.
In contrast, the firm said Australian asset valuations had 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 said.
BlackRock's Australian share investments include BHP, CSL, Commonwealth Bank of Australia and others, according to its website.
Last week, the Reserve Bank of Australia cut its cash rate from a 13-year high of 4.35% to 4.10%, saying progress had been made on inflation, though it remained cautious on further monetary policy easing.
BlackRock said it supported the central bank's cautious stance amid a tight labour market and geopolitical uncertainty caused by the threat of the Trump administration's tariffs.
"The main risk for the RBA is definitely around the labour market … that 4% unemployment rate obviously is causing them a bit of consternation," said Craig Vardy, BlackRock's Australasia head of fixed income.
That would reduce the prospect for more rate cuts to stimulate growth for Australia's households, he added.
(This story has been refiled to add more details to job role in paragraph 2)
(Reporting by Christine Chen in Sydney; Editing by Jamie Freed)
