The MSCI EM Index rose by 1% on October 16, 2026, following positive comments on artificial intelligence from Federal Reserve Chair Kevin Warsh. Speaking at the IMF and World Bank meetings in Bangkok, Warsh characterized AI as a significant economic shift, though he cautioned that a short-term investment boom could trigger inflationary pressure.
Warsh emphasized the Fed's focus on price stability without providing specific guidance on future interest rate adjustments. On September 16, the Federal Reserve increased its target rate by 25 basis points to a range of 3.75%–4.00%, while September inflation data indicated a 0.6% month-over-month price increase.
Emerging markets experienced net capital outflows of $26.3 billion in September, with $19.2 billion withdrawn from equities and $7 billion from bonds. Despite this, Taiwan and South Korea reported earnings growth linked to AI-driven spending in the technology and semiconductor sectors.
Market valuations for emerging-market stocks currently trade at approximately 10 times forward earnings, compared to nearly 20 times for US equities. Meanwhile, Indonesian stocks declined following reports that MSCI is considering reclassifying the country's emerging-market status.
