BlackRock shifts emerging markets back to overweight, citing Korea and Taiwan

BlackRock's upgrade of emerging-market equities to overweight marks its second stance reversal this year, after a June downgrade to neutral driven by concerns that Taiwan and South Korea shared overlapping AI concentration risk via the same semiconductor supply chain. The renewed focus on Korea and Taiwan, along with Latin America's commodity exposure, indicates the firm believes the earlier concentration risk has been sufficiently reduced following Korea's post-selloff deleveraging to warrant fresh exposure. For markets, a shift of this magnitude from the world's largest asset manager typically attracts flows toward the specific names and regions highlighted, especially semiconductor and memory-related equities in Korea and Taiwan, and commodity and infrastructure plays tied to Latin America's role in AI buildout. The reversal also highlights how rapidly institutional positioning on AI-exposed emerging markets has shifted through 2026, with sentiment moving from overweight to neutral and back to overweight within a single year.

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BlackRock has reversed its stance on emerging-market equities to overweight just months after downgrading them, betting that AI-driven resource demand and improving fundamentals in Korea outweigh the concentration risks it flagged in June.

Summary:

• BlackRock strategists, led by Wei Li, upgraded emerging-market equities to overweight in a Monday note, according to the source material.
• The firm cited AI-driven demand for scarce inputs and stronger corporate profitability as key reasons for the upgrade.
• South Korea and Taiwan were singled out for their central role in semiconductor and memory supply chains.
• Latin America was flagged for its exposure to bulk commodities and infrastructure tied to AI buildout.
• The move reverses a June downgrade to neutral, which had cited AI concentration and leverage risks, particularly in Korea.
• BlackRock said Korea's deleveraging following a large sell-off in July supports the return to an overweight stance.

BlackRock has raised its view on emerging-market equities to overweight, reversing a downgrade made only in June, according to a Monday note from strategists including Wei Li. The firm said AI-driven demand for scarce resources and stronger corporate earnings should help emerging markets outperform going forward.

South Korea and Taiwan were named as central to the shift; both markets play a critical role in global semiconductor and memory chip supply chains that feed the broader AI buildout. Latin America was also highlighted, with BlackRock pointing to the region's exposure to bulk commodities and infrastructure that support AI-related demand, a framing the firm has used repeatedly through 2026 to distinguish Latin American markets from the chip-heavy exposure of Asian economies.

The upgrade marks a reversal of BlackRock's June call, when the firm cut emerging-market equities to neutral from overweight, warning at the time that markets such as Korea and Taiwan carried overlapping risk given their shared reliance on the same AI and semiconductor value chain. That downgrade came as Korean equities, which had rallied sharply earlier in the year, suffered a significant sell-off. BlackRock now says Korea has since deleveraged meaningfully following that sell-off, easing the concentration and leverage concerns that prompted the June downgrade and supporting a return to overweight.

The reversal illustrates how quickly institutional positioning toward AI-exposed emerging markets has shifted through the year, moving from overweight in the first half, to neutral by mid-year, and back to overweight by September. It also reinforces a theme BlackRock has returned to repeatedly in 2026: that AI's demand for physical inputs, chips, memory, power and raw materials, is reshaping which emerging economies look attractive, favouring semiconductor hubs in Asia and resource-rich economies in Latin America over broader, undifferentiated emerging-market exposure.

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The KOSPI chart analysis

The recovery off the July 29 crash low (an intraday spike to 5,263, closing at 5,663) has now failed twice at almost the same ceiling. The rally first topped at 7,217 on August 18, pulled back, then pushed a second time to 7,172 on September 8, a slightly lower high than the first attempt. Since that September 8-10 peak, price has fallen for four straight sessions, from a close of 7,034 down to today's 6,666, a slide of roughly 5% in under a week.

That's the story worth flagging: a double top near 7,170-7,220 followed by a sharp, persistent reversal. Today's low of 6,625 lands right on the most recent higher low (the September 4 low at 6,633), which is the level that has underpinned this recovery's structure since late August. Realized volatility has also stepped up, the average daily range is now running around 3% of price, versus roughly 2.2% earlier in the year, so moves of this size are less unusual in the current regime than they'd have been in January.

What to watch next

A close below the 6,560-6,630 zone would break the recent chain of higher lows and open the door toward the August consolidation area near 6,400. Holding above that zone, or a push back toward 7,170, would suggest the pullback is a normal retest rather than a trend change.

Educational takeaway

A failed second attempt at a high, a double top, doesn't prove a reversal on its own, but it does remove a piece of bullish evidence: sustained acceptance above resistance never actually happened. That shifts the burden of proof onto the bulls to defend the higher lows.

Risk note

Technical levels are reference areas, not guarantees. Given the recent pickup in volatility, conditions here can shift quickly. Trade or invest at your own risk and use risk controls appropriate to your circumstances.

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