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Akbar Novruz

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BlackRock Inc. has revised its investment outlook through mid-2026, adopting a more cautious stance on emerging market equities while upgrading its view on short- and medium-term eurozone government bonds, AzerNEWS reports.

According to a report by the BlackRock Investment Institute, one of the key reasons for the downgrade is growing concern over the high concentration of artificial intelligence-related companies in several emerging markets, particularly Taiwan and South Korea, whose equity markets are heavily dependent on the AI sector.

The report notes that geographical diversification alone does not eliminate concentration risks when multiple markets are tied to the same technology value chain.

Emerging market stocks have come under pressure in recent weeks amid a broader sell-off in technology shares and expectations that the US Federal Reserve could maintain tighter monetary policy. As a result, the MSCI Emerging Markets Index is on track for its weakest monthly performance since March.

Despite the more cautious view on emerging markets, BlackRock maintained a positive outlook on US equities, particularly technology stocks, arguing that continued investment in artificial intelligence will remain a key driver of growth and further increase the weight of US stocks in global investment portfolios.

In fixed-income markets, the firm upgraded short- and medium-term eurozone government bonds from "neutral" to "outperform," saying investors may be overestimating how long restrictive monetary policy will remain in place.

BlackRock, however, maintained its "underperform" rating on long-term US government bonds, citing persistent inflationary pressures linked to investments in AI infrastructure, which have reduced their appeal as traditional safe-haven assets.

The firm also noted that credit markets remain resilient, supported by low default rates and strong debt repayment activity. It continues to favor highly rated US and European high-yield corporate bonds over investment-grade debt, with a preference for short-duration high-yield bonds due to their lower sensitivity to interest rate movements.

Jean Boivin, Head of the BlackRock Investment Institute, said the rapid expansion of artificial intelligence is creating new opportunities for selective investment strategies in credit markets and is expected to become one of the key drivers shaping investment decisions in the coming years.