NEW YORK (Reuters) - BlackRock Inc (N:BLK), the world's largest asset manager, said it was cutting an earlier recommendation to invest in Japanese stocks amid fears market turbulence and a strong yen may erode exporters' earnings.
"Market volatility has surged since the Bank of Japan's announcement of negative interest rates in late January, and a significantly stronger yen is raising downside risk to exporter earnings," the New York-based company said in an unsigned note distributed Thursday.
"The financials sector is likely to come under greater pressure should interest rates move deeper into the negative."
Last month, a top BlackRock strategist described Japanese stocks as cheap and "oversold," saying a move by the Bank of Japan to lower rates would likely weaken the yen and strengthen the country's stock values.
(This story has been corrected to say "last month" instead of "earlier this month" in last paragraph)