A new playbook for investors: Active, not passive
Powell said the global investment environment has undergone a structural shift after the end of the “great moderation” — the period from the Global Financial Crisis to the pandemic when “being long and not touching your portfolio” was enough to generate strong returns.
Those days are over.
“We are now in a world of geopolitical fragmentation, trade tensions and revolutionary technology like AI,” he noted. That means investors must move away from broad passive exposure and become far more selective —
by geography, by asset class, and even down to specific sectors and companies.
AI, he said, is generating massive headwinds and tailwinds simultaneously — transforming supply chains, rewarding innovation-heavy markets and penalising economies unable to keep pace.
India’s underperformance was external and could reverse soon
India’s recent soft patch, according to Powell, is not a reflection of domestic weakness but because two global trends played out elsewhere:
- The AI megaboom which benefited Korea, Taiwan and China tech much more than India
- US–India trade tensions, which created a persistent overhang for global investors
- Both pressures, he said, appear to be easing sharply.
Powell pointed to President Trump’s remarks at the swearing-in ceremony of the new US Ambassador to India, hinting that a trade agreement may be close. “It’s sketchy but encouraging,” he said, calling it a major sentiment driver.
Meanwhile, India’s valuations, once trading at a heavy premium to emerging markets, have “reset dramatically”, making them far more attractive.
India is not just a hot money trade: It’s becoming core allocation
Pushing back against the belief that FPIs oscillate tactically between India and China, Powell said India is structurally under-owned globally.
“India’s market cap is now equivalent to the UK and Germany combined,” he said, arguing that global benchmarks still under-represent its true economic scale.
In contrast, China’s macro picture remains “dull”, weighed down by property stress and demographic challenges. But selective opportunities exist in Chinese AI and engineering-heavy sectors.
Why BlackRock remains overweight US equities
Despite concerns of concentration and “a whiff of euphoria”, BlackRock remains overweight the US because the AI boom is not just hype — it is earnings-driven.
“It feels like a hinge moment in human history,” Powell said. “But the fundamentals back it up. Earnings and positive surprises continue to drive AI-linked stocks upward.”
Beyond equities, Powell said the AI supply chain is where long-term opportunities lie — in power generation, transmission, data centres, copper, and engineering capacity.
“We need trillions in new infrastructure to power the silicon brain,” he said. Private capital, not governments, will drive this build-out.
Energy security now Trump’s globalisation
Powell said countries are “moving from naïve globalisation to extreme energy pragmatism”. With supply chains now politically sensitive, nations want energy security, not just clean energy.
This shift supports investment in traditional and renewable energy infrastructure, providing new long-term opportunities.
BlackRock’s tactical and long-term calls for India
Over the next 6–12 months, BlackRock favours:
- US equities (AI-driven earnings strength)
- Japan (corporate governance reforms and shareholder-friendly behaviour)
- India (valuation reset, regulatory improvements, and easing US tensions)
- For India specifically, Powell said the story is not just equities.
He is “constructive on Indian local currency bonds”, citing favourable inflation dynamics and attractive real yields that give the RBI policy flexibility.