US Investigates BlackRock’s Chinese Investments
The US Government has launched an investigation into BlackRock, the $9 trillion asset management giant, over its investments in Chinese companies. Lawmakers have expressed concerns that Americans’ retirement funds are unwittingly supporting Chinese firms flagged by the US for security and human rights issues. The House of Representatives Select Committee on the Chinese Communist Party recently notified BlackRock and MSCI, a major provider of equity indexes, of the probes into their activities.
JUST IN: 🇺🇸 US Government launches investigation into $9 trillion asset manager BlackRock over Chinese investments.
— Watcher.Guru (@WatcherGuru) August 1, 2023
US Probe
The investigation aims to gather crucial facts to inform US policies concerning China, particularly on American capital flows. The committee alleges that by directing “massive flows of American capital” to these Chinese entities, US firms like BlackRock are exacerbating national security threats and undermining American values.
Letters outlining the investigation were signed by the committee’s chairman, Republican Rep. Mike Gallagher of Wisconsin, and its top Democrat, Rep. Raja Krishnamoorthi of Illinois. According to the committee, BlackRock has invested over $429 million in Chinese companies across five of its funds.
As one of the world’s largest asset managers, BlackRock holds immense influence over the investment decisions of millions of Americans, who trust the firm to handle their savings responsibly. In response to the investigation, BlackRock issued a statement expressing its engagement with the committee to better understand their concerns. The firm defended its China investments, stating that most of its clients’ investments in China are through index funds and that they are among 16 asset managers offering US index funds investing in Chinese companies.
BlackRock and MSCI in the Spotlight
MSCI, whose indexes are widely used as a basis for investment portfolios by many investors, is also under scrutiny in this investigation. The firm manages over $13 trillion of benchmarked assets. MSCI stated that it is reviewing the committee’s inquiry and emphasized that all index decisions are made after consultations with a diverse range of global market participants.
Interestingly, the investigation into BlackRock comes just two weeks after the Securities and Exchange Commission (SEC) acknowledged BlackRock’s application for a Spot Bitcoin Exchange-Traded Fund (ETF). This confluence of events has brought heightened attention to the company’s activities and underscores the growing concerns surrounding investments in Chinese entities and the implications for US national interests.
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The outcome of the investigation may have significant implications for the investment landscape and could potentially influence US policies related to capital flows and national security considerations in the context of China. As the probe unfolds, industry stakeholders and investors alike will be closely monitoring developments to understand the potential ramifications on the global financial markets.
