High AI weight in South Korea and Taiwan causes concern! BlackRock downgrades emerging markets rating, upgrades European bonds to "Buy".

Notice that, according to the 2026 Global Investment Outlook released by the BlackRock Research Group, the organization is currently cautious about emerging market stocks and bullish on euro area short-term government bonds. For emerging market stocks, the organization cites the risk of excessive concentration in AI exposure. As for euro area short-term government bonds, the organization indicates that market concerns about policy seem to be overstated when discussing interest rate prospects. The world's largest asset management company has downgraded its view on emerging market stocks from "overweight" to "neutral" for the next 6 to 12 months. The reason given is the risk posed by countries like Taiwan and South Korea that are highly exposed to AI-related companies in the market. BlackRock Investment Institute, a department specializing in investment research under the asset management company, stated in their report, "When multiple markets are tied to the same value chain, geographical diversification does not reduce concentration risk. It is this concentration risk that has led us to downgrade the rating on widely-held emerging market stocks." Last week, the sell-off triggered by technology stocks once again hit the South Korean stock market hard, and the expectation of a more hawkish stance by the Federal Reserve continued to rise, resulting in the most brutal weekly decline for emerging market stocks since early March. The MSCI Emerging Markets Index is currently heading towards its worst monthly performance since March. Despite this, BlackRock remains optimistic about the US stock market which has a large share of technology stocks. The report states, "We seek broad AI exposure through US technology stocks, which makes us overweight US stocks. Although the ultimate winners are not yet clear, many winners are likely to emerge there." The report reflects the views of senior investment portfolio managers and investment executives at BlackRock. In the fixed income field, the company has upgraded its rating on euro area short-term government bonds from "neutral" to "overweight," and stated that investors have overestimated the time for monetary policy to remain restrictive. Winners and Losers At the same time, the organization maintains a "underweight" position on US long-term government bonds. This is because the sustained inflation caused by significant AI infrastructure spending has eroded their role as safe haven assets. The report points out that the credit market has shown almost no signs of systemic breakdown, defaults are under control, and yields remain meaningful. In the high yield bond sector, BlackRock prefers higher-rated US and European junk bonds over investment-grade bonds. In the high-grade bond sector, they prefer short-term corporate bonds over long-term corporate bonds, as they face less interest rate risk. Jean Boivin, Head of BlackRock Investment Institute, mentioned in an interview that the transformation led by AI may create more opportunities for selective investments in the credit bond space. He said, "I think there will be much greater differentiation and AI disruption in this sector, so it will become a story of capturing excess returns in this space."