Downgrade from 'overweight' to 'neutral'

Samsung Electronics, SK hynix, TSMC flagged for AI-heavy exposure

BlackRock on Monday downgraded its investment outlook on emerging market stocks, including South Korea, citing excessive concentration in AI-related sectors. [Yonhap]
BlackRock on Monday downgraded its investment outlook on emerging market stocks, including South Korea, citing excessive concentration in AI-related sectors. [Yonhap]

BlackRock, the world's largest asset manager, has cut its investment outlook on emerging market stocks — including South Korea — by one notch, citing excessive concentration in AI and other specific sectors.

The BlackRock Investment Institute downgraded its six-to-12-month view on emerging market equities from "overweight" to "neutral" in its second-half 2026 global investment outlook report, released Monday.

BlackRock said emerging market stocks in South Korea and Taiwan carry heavy exposure to AI-related companies. "When multiple markets are connected to the same supply chain, geographic diversification does not reduce concentration risk," the report said, adding that this concentration risk was the primary reason for the downgrade across emerging market equities broadly.

The assessment pointed to the limits of the South Korean market, dominated by Samsung Electronics and SK hynix — commonly referred to together as "Samjeonnix" — and the Taiwanese market, where TSMC holds an outsized position.

BlackRock maintained its "overweight" stance on US equities, which are heavily weighted toward technology companies. "We are seeking broad AI investment opportunities through US technology stocks, and accordingly maintain our overweight on US equities," the report said. "It remains unclear which companies will ultimately emerge as winners, but many of them are likely to be in the United States."

On long-term US government bonds, BlackRock again issued an "underweight" recommendation. The firm said massive investment in AI infrastructure has stoked inflation, weakening the traditional safe-haven role of US Treasuries.

For short- and medium-term eurozone government bonds, BlackRock raised its outlook from neutral to overweight, saying investors are overestimating how long monetary policy tightening will last.

Jean Boivin, head of the BlackRock Investment Institute, told Bloomberg that AI-driven disruption would deepen polarization among companies in the corporate bond market. He advised investors to be selective — carefully picking high-quality companies — in order to generate returns above the market average.


kate01@heraldcorp.com