MSCI Chairman “Inclusion in developed indices can be accomplished faster… timing issue”

Regarding Korea's inclusion in the MSCI developed country index, Henry Fernandez, Chairman of Morgan Stanley Capital International (MSCI) Group, said, "It could happen sooner," and added, "For that to happen, we need to make sure that system improvements are put into practice."

Chairman Fernandez attended the 'New Growth Paradigm in the AI ​​Era: The Evolving Role of Finance' international conference held by the World Economic Research Institute and KB Financial Group at the Fairmont Ambassador Seoul in Yeouido, Seoul on the 6th and said, "I think (inclusion in the developed index) is a matter of timing."

Chairman Fernandez explained, "MSCI must identify the needs of international investors as an agent," and added, "The Korean government is carrying out all necessary reforms in all areas, and we have witnessed its determination and great progress, but we are in a situation where we need to put the ball in the goal to get to the finish line."

He added, “In order to cross the finish line, progress related to institutionalization must be translated into implementation,” adding, “I told government officials that there are still difficulties in transacting won settlements in the spot exchange market.”

Regarding the sharp decline in the Korean stock market following the United States after the Democratic Party won a landslide victory in the U.S. midterm elections, he emphasized, "The direction that a large-scale investment in AI is required in a technological revolution unprecedented in history is clear."

Chairman Fernandez predicted, however, that there will be a lot of volatility until the technological revolution is reached.

He pointed out, “The current tremendous global economic growth is premised on the expansion of data centers, and if construction were to stop, it would send the global economy into a recession.”

He added, “It will have a big impact on Korea, which plays an important role in trade, but it is better to think of it as a small difficulty that will be experienced once in a while,” adding, “There is competition with China and (in the long term) the United States will not be able to completely shut down (AI investment).”

Joseph Stiglitz, a professor at Columbia University and a Nobel Prize winner in economics, who participated in the conference via video, expressed concern regarding AI investment, saying, "The size of the bubble is growing, so when it bursts, the impact on the global economy will be more serious."

He asked himself, “What conditions must be met for investors to realize expected returns?” and diagnosed, “The problem is whether we have the will to benefit humanity commensurate with the potential of AI.”

He continued, “AI opens up the possibility of realizing super abundance,” and suggested, “The roles of the public and private sectors should be readjusted, and the economic performance of AI should be shared broadly through investments in socially valuable areas such as education, health, and care.”

Victor Cha, Korea Chair at the Center for Strategic and International Studies (CSIS), a U.S. think tank, said that according to a recent survey on the foreign policy preferences of voters in key states in the U.S. midterm elections, the majority of respondents, regardless of party affiliation, said that foreign policy has a very large impact on their daily lives and that it is important for the U.S. to support democracy around the world.

He said, “The Trump administration will be very focused on investment agreements with the U.S. going forward,” and added, “There is the prospect that China may engage in military action, and there may also be economic pressure, so the most concerning point next year is related to China.”

He added, “The positive aspect is that as a result of the midterm elections, the United States will emerge from an unpredictable period and politics will move much more toward the center.”