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BlackRock pays ten times forward earnings for a 34% emerging-market growth forecast
BlackRock's first overweight on the asset class this year rests on an index-level forecast of more than 34% earnings growth against roughly 20% for US stocks, plus the Korean and Taiwanese chip chains it also names as its main risk.
The Investor · Invest desk
What happened
- BlackRock raised emerging market equities to overweight on September 15, 2026, its first overweight on the asset class since it pulled back earlier in the year.
- The firm projects earnings growth above 34% for the MSCI Emerging Markets Index over the next twelve months, against roughly 20% for the MSCI USA Index.
- South Korea and Taiwan sit at the centre of the thesis, and the commentary also named commodities and physical infrastructure in Latin America.
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Why it matters
- contradiction South Korean leverage was the reason to stand down in June and South Korean chip chains are the reason to stand up in September, so by BlackRock's own account positioning, not earnings, is the swing factor.
- constraint The 34% is an index-level number and its semiconductor share is unpublished, so anyone following the call through the index owns every MSCI EM constituent at index weight.
- exposure An overweight concentrated in Korean and Taiwanese supply chains sits on the same fault line BlackRock lists as its leading risk, so part of what the ten times multiple buys is Taiwan exposure.
- decision Allocators have to decide whether to follow a manager with more than $10 trillion that has moved this same view twice in three months.
Ten times forward earnings against nearly twenty is a 10% earnings yield against 5% [6][1]. Divide each multiple by the growth it is meant to be buying and the spread gets wider: 10 over 34 is 0.29, and 20 over 20 is 1.0 [4][5][2]. On BlackRock's own forecasts, the emerging-market buyer pays half the multiple for about 1.7 times the growth [7].
The 34% is a forecast for the MSCI Emerging Markets Index as a whole, and Cryptobriefing's account does not break out how much of it comes from the chip and memory makers in South Korea and Taiwan that sit at the centre of the thesis [4][15][7].
Hold prices flat, run the forecasts through, and emerging markets finish the twelve months at 7.5 times delivered earnings, the US at 16.7 [4]. Delivery can break. If emerging-market earnings grow 20% instead of 34%, the index lands at 8.3 times and the growth advantage over the US disappears, leaving the multiple gap by itself [5].
BlackRock moved the allocation to neutral in June 2026 over leverage in markets like South Korea, then to overweight on September 15, roughly three months later, with South Korea at the centre of the new thesis [8][2][7][6]. The firm attributes the change to positioning: the summer's deleveraging washed out excessive positioning and earnings momentum reasserted itself [9]. It also lists speculative leverage rebuilding in Korea, and geopolitical tension around Taiwan, among the risks to the call [13].
The strategy sits with Egon Vavrek, head of emerging markets and a managing director who joined BlackRock in April 2025 from APG Asset Management [10]. His positioning is built around what the industry calls picks-and-shovels firms, the ones that manufacture the chips, memory modules and physical infrastructure behind AI models instead of building the models [14]. The firm's wider commentary sorts AI spending into hardware, power, materials and infrastructure [12].
In my view the price is the sounder half of this trade and the earnings forecast the softer one: ten times is a level you can transact at, and 34% index-level growth is an estimate twelve months from settlement [6][4]. At ten times, delivery is what an investor needs, and 34% earnings growth pays even if the multiple never moves [6][4]. The test is whether Korean leverage rebuilds before the earnings arrive, and BlackRock used that same concern to stand down in June [13][8].
What to watch
- Whether BlackRock's next commentary holds the 34% MSCI EM earnings forecast or trims it as forward estimates roll.
- Signs that speculative leverage in South Korea is rebuilding, the condition the firm cited when it went neutral in June.
- Whether BlackRock breaks out the semiconductor and memory share of the emerging-market earnings forecast.