BlackRock Inc. has scaled back its recommendation for emerging-market equities, shifting its view to neutral from overweight for the next six to 12 months, according to the 2026 mid-year global investment outlook published by the BlackRock Investment Institute.
The world’s largest asset manager highlighted concentration risks in markets with heavy exposure to firms tied to artificial intelligence, singling out regions such as Taiwan and South Korea. Those markets, BlackRock says, are vulnerable when a high share of listed companies are connected to the same AI-related value chain.
Recent market moves have reinforced that concern. Emerging-market stocks suffered their steepest weekly decline since early March last week, pressured by a technology sector selloff and growing expectations that the Federal Reserve may take a more hawkish stance. The MSCI Emerging Markets Index is also on track for its worst month since March.
BlackRock summed up the concentration danger succinctly: "Geographic diversification does not reduce concentration risk when multiple markets are tied to the same value chain," the report said. That assessment underpins the downgrade of broad emerging-market equities despite their overall appeal to some investors.
By contrast, BlackRock kept a favorable tilt toward U.S. equities. The firm pointed to the large presence of technology companies in U.S. markets as an efficient way to obtain broad AI exposure: "We seek broad AI exposure through US tech, leading us to overweight US equities," the report said. "Even if the ultimate winners are unclear, many are likely to be found there."
On the fixed-income side, BlackRock raised its view on short- and medium-term euro-area government bonds to overweight from neutral, arguing that many investors are overestimating how long monetary policy will remain restrictive. The move reflects a preference for sovereign paper in the euro area with shorter duration.
The firm maintained an underweight position on long-term U.S. government bonds, noting that "persistent inflation driven partly by spending on AI infrastructure has reduced these bonds' safe-haven appeal." In broader credit, BlackRock favors higher-rated U.S. and European junk bonds over investment-grade debt, and within high-grade debt it prefers short-term corporate bonds because they carry less interest-rate risk than long-term alternatives.
Jean Boivin, head of the BlackRock Investment Institute, noted that AI-related market shifts could open targeted opportunities in credit: Jean Boivin, head of the BlackRock Investment Institute, said AI disruptions could create more opportunities for selective investing within credit markets.