BlackRock Investment Research Institute said that due to factors such as scarce AI resources, profit growth, and low valuations, BlackRock's research department once again raised emerging market stocks to overallocation. Strategists, including Wei Li, wrote in a report on Monday: “We believe that while the boom in AI-related investments consumes capital, electricity, and other scarce resources, such investments can still support economic growth and corporate profits. Emerging market equities now provide yet another area where profits can cross a higher threshold.” The strategist said that the market unanimously expects the MSCI Emerging Markets Index to increase by more than 34% in the next 12 months, while the MSCI US Index will be 20%; at the same time, the valuation of emerging market stocks will be discounted by 50% compared to US stocks. The weakening of the US dollar and the increase in capital inflows are additional supporting factors that are bullish on emerging markets. “Korea and Taiwan are at the core of the semiconductor, memory chip, and hardware supply chain. Latin American countries such as Brazil can provide the resources and physical infrastructure needed to build AI.” Note: The agency downgraded emerging market stocks from overallocation to neutral in June due to the risk of concentration in the AI sector and the risk of leverage, particularly in the Korean market. The strategist wrote in Monday's report: “The South Korean stock market then declined. The summer deleveraging operation mitigated previous leverage concerns, which supported us to move back up to overallocation.” BlackRock maintained an overmatch between US stocks and the AI sector and lowered short-term European government bonds to neutral.

BlackRock Investment Research Institute said that due to factors such as scarce AI resources, profit growth, and low valuations, BlackRock's research department once again raised emerging market stocks to overallocation. Strategists, including Wei Li, wrote in a report on Monday: “We believe that while the boom in AI-related investments consumes capital, electricity, and other scarce resources, such investments can still support economic growth and corporate profits. Emerging market equities now provide yet another area where profits can cross a higher threshold.” The strategist said that the market unanimously expects the MSCI Emerging Markets Index to increase by more than 34% in the next 12 months, while the MSCI US Index will be 20%; at the same time, the valuation of emerging market stocks will be discounted by 50% compared to US stocks. The weakening of the US dollar and the increase in capital inflows are additional supporting factors that are bullish on emerging markets. “Korea and Taiwan are at the core of the semiconductor, memory chip, and hardware supply chain. Latin American countries such as Brazil can provide the resources and physical infrastructure needed to build AI.” Note: The agency downgraded emerging market stocks from overallocation to neutral in June due to the risk of concentration in the AI sector and the risk of leverage, particularly in the Korean market. The strategist wrote in Monday's report: “The South Korean stock market then declined. The summer deleveraging operation mitigated previous leverage concerns, which supported us to move back up to overallocation.” BlackRock maintained an overmatch between US stocks and the AI sector and lowered short-term European government bonds to neutral.