BlackRock, the world's largest asset manager, said investment risks in Korean and Taiwanese stocks are rising, citing concern that concentration in corporations tied to artificial intelligence (AI) could shake the markets.
On the 30th (local time), BlackRock downgraded its view on emerging-market equities to "neutral" from "overweight," pointing to growing concentration in corporations related to AI. The downgrade came after emerging-market stocks logged their biggest weekly drop since early March in the wake of last week's tech sell-off and expectations of a more hawkish tilt by the U.S. Federal Reserve (Fed).
BlackRock warned that risks have increased especially in markets like Korea and Taiwan, where corporations tied to AI make up a large share. "When multiple markets are tied to the same AI value chain, simple geographic diversification cannot reduce concentration risk," it said, adding, "Reflecting this concentration risk, we downgraded our view on emerging-market equities overall."
It kept an overweight view on U.S. stocks. BlackRock said it seeks "broad investment opportunities in AI through U.S. tech stocks," adding that "while the ultimate winners have not yet been determined, many are likely to emerge from the United States."
In addition, it upgraded its view on eurozone short- and medium-term Government Bonds to "overweight" from "neutral," while maintaining an "underweight" stance on long-term U.S. Treasurys.