BlackRock, the world's largest asset manager, has named South Korea a key destination as it expands its emerging market exposure, citing rising semiconductor demand from the spread of artificial intelligence (AI) as a driver of the Korean market's upside.
In a report released Thursday local time, BlackRock upgraded its investment view on U.S. and emerging market equities to "overweight." Among emerging markets, it singled out Korea as a primary reason for the upgrade.
"Korea is one of the key reasons for our overweight on emerging markets," said Wei Li, BlackRock's Global Chief Investment Strategist. She said strong growth momentum is emerging in the technology supply chain centered on semiconductors, explaining that structural growth continues as Korea's role within the technology ecosystem expands.
Expanding AI investment is also acting as a positive factor for the Korean stock market, the firm said. As global companies increase AI-related spending, earnings are improving, which is leading to upward revisions in 2026 corporate profit forecasts. BlackRock emphasized that AI investment is also the reason earnings forecasts are improving despite geopolitical risks in the Middle East.
The Korean market is a direct beneficiary of this trend, BlackRock said. A semiconductor-driven industrial structure, combined with rising demand for AI hardware, is driving earnings improvements. The KOSPI experienced volatility from the fallout of the Middle East war but has recovered most of its losses, gaining about 47% so far this year — outperforming major global markets.
Concerns have been raised about market concentration, but BlackRock does not view this as a structural risk. "Some investors see the concentration in large-cap semiconductor stocks as a problem, but it is a natural phenomenon during a technology transition," Li said. "At this point, it is not a level of major concern."
The judgment also aligns with shifts in global capital flows. As the AI investment cycle kicks into gear, allocations to hardware supply chains such as semiconductors and data centers are expanding, with Korea emerging as a central pillar, the firm said.
BlackRock projected that earnings improvements at Korean companies will continue as long as AI demand persists. Accordingly, the possibility of additional overweight positioning and fund inflows from global asset managers remains open, it said.
