Asian Chip Stocks Too Concentrated: Fidelity and BlackRock Begin Trimming Positions
N.R. Finch
TSMC, SK Hynix, and Samsung now account for roughly 29% of the MSCI Emerging Markets index. Fidelity and BlackRock are cutting exposure — when three stocks outweigh most countries, the index itself is warping.
Where did the $1.8 trillion rally come from?
TSMC, SK Hynix, and Samsung are the key suppliers in the US hyperscaler race for AI chips and data-center capacity. Each is valued at roughly $1 trillion or above.
Over the past six months, a chip shortage drove prices higher and nearly doubled their combined market cap — a gain of about $1.8 trillion.
This means → the rally's engine is extremely narrow: one supply-demand gap, three stocks, capturing most of the EM index's gains.
Three stocks at 29% of the index — what does that mean?
TSMC, SK Hynix, and Samsung together carry roughly 29% of the MSCI EM index — more than most individual countries.
In plain terms = SK Hynix alone outweighs Brazil and South Africa combined; the three stocks together are about triple the weight of all Indian stocks in the index.
This reflects a structural shift: the EM index is no longer a diversified basket of countries — it increasingly resembles an Asian chip-sector ETF.
Why are Fidelity and BlackRock pulling back?
Fidelity International and BlackRock have both raised doubts about the rally's sustainability.
Fidelity multi-asset portfolio manager Caroline Shaw called index concentration and the surge in leveraged bets on Korean chip stocks "markers in the sand" — signals for judging "whether this has gone too far."
She has cut growth-stock exposure and shifted toward "less-loved companies" in emerging markets, but declined to comment on individual names.
Where does risk stack up?
Rising index concentration plus growing leveraged positions are now key variables in institutional risk assessments.
SK Hynix and Samsung have already pulled back recently, yet their index weights remain elevated.
This means → if the chip cycle turns or leveraged positions unwind at once, the damage won't stay with these three stocks — the entire EM index gets dragged, because they are nearly a third of the index itself.
Content is for reference only, not financial advice.