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BlackRock just went overweight on emerging market equities for the first time since pulling back earlier this year. The reason is straightforward: the firms building AI hardware, and the countries housing their supply chains, are about to have a very good run.
Egon Vavrek, BlackRock’s Head of Emerging Markets and a Managing Director who joined the firm in April 2025, is positioning the strategy around what the industry calls “picks-and-shovels” players. These are the companies that don’t build the AI models themselves but manufacture the chips, memory modules, and physical infrastructure that make those models possible.
The numbers behind the bet
BlackRock raised its emerging market equities stance to overweight on September 15, 2026. The firm projects earnings growth of more than 34% for the MSCI Emerging Markets Index over the next 12 months. For comparison, the MSCI USA Index is expected to deliver roughly 20% over the same period.
Emerging market equities are trading at approximately 10 times forward earnings. US equities sit at nearly 20 times.
South Korea and Taiwan sit at the center of the thesis. Both countries dominate the global semiconductor and memory chip supply chains that AI development depends on.
A reversal that tells a story
This overweight call didn’t come out of nowhere. BlackRock had actually moved emerging market equities to neutral back in June 2026, citing concerns about leverage in markets like South Korea. What changed over the summer was a period of deleveraging. Excessive positioning washed out, and earnings momentum reasserted itself.
Vavrek’s background adds credibility to this approach. Before BlackRock, he spent time at APG Asset Management, one of Europe’s largest pension fund managers, where he developed expertise in sectors that benefit from capital-intensive infrastructure buildouts.
Beyond semiconductors: Latin America enters the frame
The strategy isn’t limited to East Asian chipmakers. BlackRock’s commentary also highlighted commodities and physical infrastructure in Latin America as strategic investments within the broader AI landscape.
The firm’s broader investment commentary has emphasized hardware, power, materials, and infrastructure as the key categories where AI spending is accelerating.
What this means for global allocations
When the world’s largest asset manager, with over $10 trillion in assets under management, shifts its stance on an entire asset class, portfolio managers across the industry tend to notice.
But there are risks worth watching. Semiconductor supply chains remain vulnerable to geopolitical tensions, particularly around Taiwan. Leverage concerns in South Korea, while addressed by the summer’s deleveraging, could resurface if speculative positioning rebuilds quickly.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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