Equities Are Mispricing Energy Risk, Warns BlackRock’s Wei Li

BlackRock has flattened equity directional exposure to neutral and is shifting allocations toward thematic strategies in response to the war in Iran, according to Wei Li. The move signals a risk-off posture that could reduce broad equity beta and increase demand for thematic/sector-specific trades and hedges, potentially affecting volatility and sector performance more than overall market direction in the near term.

Analysis

BlackRock has flattened equity directional exposure to neutral and is shifting allocations toward thematic strategies in response to the war in Iran, according to Wei Li. The move signals a risk-off posture that could reduce broad equity beta and increase demand for thematic/sector-specific trades and hedges, potentially affecting volatility and sector performance more than overall market direction in the near term.