A $1.8 trillion rally that lifted Asian chipmakers into the top tier of global
stocks are reversing, prompting investors to cut exposure and flagging
concentration risk in the MSCI Emerging Markets index. Fidelity International
and BlackRock said they question the sustainability of rallies in names
including SK Hynix and Samsung Electronics. Over the past six months the three
largest chip firms’ combined market cap has nearly doubled and now represents
about 29% of the MSCI EM index, larger than most single-country weights.
Fidelity multi-asset PM Caroline Shaw warned index concentration and a sharp
rise in leveraged bets on Korean chip names that amplify price swings are
warning signs. The trio’s weight is roughly three times the total weight of all
India stocks in the index, and SK Hynix alone exceeds the combined weight of
Brazil and South Africa. BlackRock Investment Institute global chief investment
strategist Wei Li said volatility in large chip and memory names has prompted
the firm to take profits at this stage and trim its EM overweight versus the
benchmark.
