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(Bloomberg) — Some of the world’s top financial leaders are preparing for continued market volatility despite the US-China trade truce — but say the uncertainty is also creating new openings for investment.
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“There’s going to be a lot of volatility until we have greater certainty as to what is the new equilibrium,” said Larry Fink at the Saudi-US Investment Forum in Riyadh. That new balance, the BlackRock Inc. chief executive officer said, depends on how the US reorders global trade. “When there is that uncertainty, you’re going to see more and more money in cash,” he said.
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On Monday, the world’s two largest economies agreed to a temporary tariff truce: The US will lower its combined 145% tariffs on most Chinese goods to 30% for 90 days. Beijing in turn will reduce its 125% duties on US imports to 10% and roll back other retaliatory measures. US stock futures paused their rally Tuesday, after optimism over the trade talks saw the S&P 500 Index close 3.3% higher Monday.
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Still, Fink sees a shift in investor preferences. “We’ve seen modest reallocation out of the United States into other economies — especially Europe,” he said, adding that more capital could flow into the Middle East, India and Japan.
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Franklin Templeton CEO Jenny Johnson highlighted how volatility creates openings for nimble investors. “Whenever there’s volatility, there’s a reset — and that’s when active management thrives,” she said. She also pointed to the rise of secondary private equity markets as investors seek liquidity in uncertain times.
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Citigroup Inc. CEO Jane Fraser struck a similar note of cautious optimism. “Volatility is the opportunity for those who get on the front foot and seize the moment,” she said.
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The Saudi-US Investment Forum is taking place in Riyadh as President Donald Trump begins his Middle East tour with a stop in the kingdom. The confab will cover a broad range of topics including energy, artificial intelligence, advanced manufacturing and finance.
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