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Shares could fall 15% due to trade wars according to $6 trillion fund manager

Blackrock is the world’s largest asset manager with over US$6 trillion of assets under management. Readers would be most familiar with Blackrock on the ASX through the iShares S&P 500 ETF (ASX: IVV) offering.

The chief executive of Blackrock, Larry Fink, earlier gave an interview to Bloomberg where he made the worrying prediction.

He suggested that the share market could fall 10% to 15% and US GDP growth would slow if Donald Trump implemented the US$200 billion tariffs on Chinese exports that the President has threatened.

As part of the interview, Mr Fink said “The market’s having a hard time digesting the whole change in globalisation and trade. The foundations of international trade are being raised and being questioned.”

Investors appear to already be becoming scared with Blackrock reporting that US$22.4 billion was withdrawn from its equity products in the June 2018 quarter.

Should we be worried?

There’s a 99% chance that we shouldn’t be worried. Everything negative that has happened since the GFC could have sent the share market backwards, but didn’t for long. Russia invading Crimea could have turned into an Eastern European war. North Korea could have escalated the situation by shooting missiles at South Korea or Japan.

None of those events turned into an economic meltdown. Perhaps some of the things President Trump is complaining about has merit. I don’t think Trump wants to blow up the global economy. Of course there is a small chance that his actions could lead to a recession in China, the US or indeed here in Australia.

However, in 15 years’ time do you think anything that Trump does will have long-term effects? Hopefully not! I believe it is prudent to build up a cash position to buy shares if there’s an opportunity, however I wouldn’t go to sell anything right now.

If the market does go on sale then I’ll be looking to buy one of these top shares for your portfolio.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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