Federal Reserve Chairman Waller supports AI boosting the economy, improving sentiment in emerging markets

According to information from Zhihong Finance APP, emerging market stocks rose after the Federal Reserve expressed optimism about the impact of artificial intelligence on the economy.

The MSCI Emerging Markets Index extended its gains to 1%, marking its first increase this week, after Federal Reserve Chair Kevin Walsh stated that AI would bring substantial benefits to the U.S. economy. In contrast to the general market optimism, Indonesia's stock market recorded its largest drop in nearly thirty years after MSCI stated that the country no longer qualifies as an emerging market.

MSCI noted that it is soliciting feedback on a proposal to reclassify Indonesia as an independent market and stated that downgrading it to a frontier market would not sufficiently reflect the severity of the country’s market issues. On Monday, the Indonesian rupiah underperformed all other Asian currencies against the U.S. dollar.

Christopher Wong, a strategist at OCBC Bank, said that while the proposed reclassification might be viewed as a “marginal negative” for Indonesian assets, the direct impact on capital flows may be limited. “The bigger concern is how this might affect investor sentiment.”

Another sign of AI boosting the economy is that Malaysia’s GDP grew by 5.3% year-on-year in the first quarter, surpassing economists’ expectations, as AI continued to drive growth in the country’s exports.