BlackRock Increases Holdings in Emerging Market Stocks, Betting on AI Resources and Profitability Advantage

BlackRock has reiterated its recommendation to increase holdings in emerging market stocks, betting that the channels for acquiring scarce resources needed for the artificial intelligence boom and strong profitability will drive it to outperform the market. The company's research department strategists noted in a report on Monday that South Korea and Taiwan are at the core of the semiconductor and memory chip supply chain, while the Latin American market offers investment exposure to the commodities and infrastructure needed for AI development. BlackRock expects that the growth in investments in this technology sector will drive up the value of these constrained resources and support corporate profits. This move marks a reversal of BlackRock's position from June, when the company downgraded its rating on emerging market stocks from overweight to neutral, warning that the concentration and leverage issues in AI (especially in South Korea) weakened the risk-return profile. BlackRock stated that the deleveraging of the South Korean stock market after a significant sell-off in July provided support for the reallocation.

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