Henry Fernandez, chairman and CEO of MSCI, one of the world's largest index providers, believes the Chinese stock market may be able to shake off recent regulatory concerns and hit an all-time high again.
Compliance issues "put pressure on the Chinese stock market every three, four or five years, and it was clear that there was a sell-off," Fernandez said in an interview on Tuesday. But soon, the market recovered and reached new heights. "
Fernandez said that every emerging market in the world has faced such a problem. He added that markets in India and Mexico are sometimes considered uninvestable because of government regulatory actions.
"We have to look at the process that Chinese regulators and other markets around the world are going through from the perspective of the past decade," he said. "
MSCI and its competitors FTSE Russell and Standard & Poor's Dow JonesIndex LLC has been adding more Chinese stocks for years because of customer demand for exposure to the world's second-largest economy.
So far, there is little sign that the index provider is changing its approach, and MSCI will meet next month withLaunch a futures contract based on the "MSCI China A 50 Composite Index" (MSCI China A 50 Connect Index).
Fernandez said that China is now going through an "error correction" stage, "all countries will go through this period."