BlackRock, the world's largest asset manager, has warned of risks in Korean and Taiwanese equities. The firm assesses that artificial intelligence (AI) concentration could shake emerging market stock exchanges.
Bloomberg reported this Sunday, citing BlackRock's "2026 Midyear Global Investment Outlook" report. BlackRock's research division took a cautious stance on emerging market equities while presenting an optimistic view on short- and medium-term eurozone government bonds.
BlackRock downgraded its investment view on emerging market equities for the next six to 12 months to "neutral" from "overweight." It pointed to risks in markets with large concentrations of AI-related companies, such as Taiwan and Korea.
The BlackRock Investment Institute said in the report, "Geographic diversification does not reduce concentration risk when multiple markets are tied to the same value chain." It added, "Because of this concentration risk, we are lowering our overall investment view on emerging market equities."
Emerging market stocks recorded their largest weekly decline since early March last week. This came as a renewed sell-off in technology stocks that hit the Korean market coincided with expectations of a strengthening hawkish stance by the U.S. Federal Reserve. The MSCI Emerging Markets Index is heading toward its worst monthly performance since March.
In contrast, BlackRock maintained an optimistic view on U.S. equities, which have a high proportion of technology companies. "We want to secure broad AI exposure through U.S. technology stocks, and therefore we view U.S. equities as overweight," BlackRock said. "Even if the ultimate winners are unclear, the majority are likely to come from the United States."
In the bond sector, BlackRock raised its investment view on short- and medium-term eurozone government bonds to "overweight" from "neutral." The firm analyzes that investors are overestimating the duration of monetary policy tightening.
BlackRock maintained an "underweight" view on long-term U.S. Treasuries. The reason is that their role as a safe-haven asset has weakened due to persistent inflation, partly fueled by massive spending on AI infrastructure.
Jean Boivin, head of the BlackRock Investment Institute, said in an interview, "The disruption caused by AI could create more selective investment opportunities within credit markets." He added, "Going forward, we will see much greater divergence and AI-driven disruption," noting, "Generating alpha (excess returns) in that area will be the key."
