Do you remember the pandemic world? When brokers were overwhelmed opening accounts for novice investors; or the world of the Ukraine invasion in 2022, or even the tariff crisis caused by Donald Trump in 2025? Well, as with the scenario of that blackboard held by the U.S. president last year in the Rose Garden, created by Jacqueline Kennedy, none of that exists anymore. Today, investors look at a world divided in two: developed stock markets, where AI plays a decisive role, and everything else... and that 'everything else' is no longer on the radar. It has disappeared.
"There is no geographical positioning. The world has been divided into two halves. Developed countries and on the other side, three-fifths of the world's population. The BRICS are no longer what they used to be: Brazil with an anti-business government, Russia is there, India now has an ambiguous geostrategic position, and China leads the emerging empire challenging the American world. The emerging markets have disappeared. How can I recommend to my clients to invest there?" reflected Ramón Forcada, Director of Analysis at Bankinter, during the presentation of his market estimates for the summer months.
The concentration around companies linked to artificial intelligence has reached such a point that a scare in the South Korean stock market, where Samsung and SK Hynix represent nearly 75% of the Kospi's weighting (with 77 listed companies), triggers a global investor panic. But make no mistake. The investor is driven by FOMO. The need to not miss out on the great wave of AI profits. There was only one week, the last week of June, when the largest semiconductor market exits by small stock buyers in 14 months were experienced, according to JP Morgan data... which was the same week when net technology purchases surged to a one-year high. Bubble or not, no one wants to miss out on the AI rally that pervades everything and overshadows everything.
If you decide today to buy an ETF linked to the MSCI World Index, the global stock investment benchmark, you should know that you are basically buying the U.S. (72%) and technology (one-third of the total). A quarter of the index is made up of major semiconductor companies and the so-called FAANGs, namely: Nvidia, Apple, Microsoft, Amazon, Alphabet, Broadcom, Micron, Meta, and Tesla. SpaceX, which joined the Nasdaq 100 on July 7, also quickly became part of the MSCI World and its weight is expected to increase as the company's free float grows in the stock market, currently very limited.
If you want to go a step further and acquire an ETF indexed to the MSCI Emerging Markets, you should know that you will overweight more of the same in your portfolio: technology. It represents almost half of the composition of an index with nearly 1,200 companies, where China has fallen to the third position in favor of the markets of Taiwan and South Korea, with 50% of the weight, thanks to the predominance of semiconductor firms. Europe, in fact, is the only market that offers some diversification. Here, information technology is the fourth most relevant sector, with a 10% weighting behind financials, industrials, and the healthcare sector (Roche, among others). The top value in the European index is ASML, the continental representative of the semiconductor sector, with a market capitalization of nearly 630 billion euros and a 130% increase in the last year. "It lags far behind the American giants, but well ahead of the rest of the European stock market. What is the reason for this miracle? Mainly, the fact that its position is unique in the world," state experts from La Financière de l'Échiquier. "It manufactures lithography machines used to produce electronic chips with cutting-edge technology, Extreme Ultraviolet (EUV). Generating this type of radiation is quite a feat: tiny droplets of tin are hit by a laser to create a plasma that briefly reaches a temperature higher than the surface of the Sun," they explain. ASML is the largest listed European company, ahead of the British Arm Holdings, also in semiconductors, Roche, which it doubles in size, HSBC, LVMH, or Novartis.
According to BlackRock data, the world's largest ETF provider, global technology fund inflows in June hit an all-time high of $31.3 billion. In fact, it's not just the month with the highest inflows, it seems that in May and June there was practically nothing else on the market. The most recent data from Bank of America shows that in the week of July 6-10, global funds entering technology recorded the highest record of all time with $183 billion, also coinciding with the fourth largest equity money inflow of the year. People are afraid, yes, but they don't want to miss the rally and prefer to take risks at the expense of disturbing their sleep threshold.
Donald Trump, the main source of volatility in the stock markets in his two years of second term after the trade crisis and amid the war in Iran, is on track to become the fourth U.S. president in history to witness four consecutive years of gains on Wall Street. This is very relevant to him four months before the midterm elections, where he fears coming out weakened while the price of filling up the tank remains high.
The VIX, the index measuring volatility on the S&P 500 (investor fear, ultimately), is trading at 16 points, half the peak it reached during the Iran war. The European Vstoxx is even lower. However, due to its high concentration, the South Korean stock market has been experiencing weeks where its declines dangerously approach 10% intraday. This is more than the average it had accustomed its investors to in a market where, by the way, the government insisted on integrating retail investors with various measures and where it is very common to use leveraged ETFs, even on a single stock - like Samsung or SK Hynix - increasing volatility.
Kieron Poon, Director of Asian Equity Investments at Aberdeen Investments, speaks of a "manageable" situation. "The balance in Lombard loans remains modest in relation to the total market capitalization of the Kospi, standing at around 0.5%, which is low in historical terms." Poon acknowledges that leveraged ETFs "require constant rebalancing," which increases downward market pressure in moments of "weakness." And although the South Korean regulator has limited declines: above 8%, the session is suspended for 20 minutes; above 15%, another 20 minutes, and if it falls more than 20%, the market closes until the next day to allow time for reflection.
Are we facing a moment of 'irrational exuberance'?, poses Beltrán de la Lastra, founder of Panza Capital, paraphrasing the recently deceased Alan Greenspan. "It seems hard to deny. Nvidia now has a market capitalization that exceeds the individual GDP of all countries in the world except the U.S. and China (...) The fascination with the technological revolution is only comparable to the indifference—or pessimism—regarding sectors outside investors' attention. Similar to 2000", the times of the dot-com bubble.
And yet, the results are there. U.S. companies are expected to improve their profits by 23% in 2026, while semiconductor firms are projected to increase theirs by up to 85%, according to Bankinter. For José Ramón Iturriaga, manager at Abante, "beneath this apparent calm in the global stock market, we can see a certain shifting of the ground. The good performance has been concentrated in a handful of names, touched by the wand of AI, which are taking a breather. Considering the enormous concentration in the U.S., this will not be innocuous for the future of the markets."