"Significant Time Expected Until MSCI Developed Markets Index Reinstatement"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] Samsung Securities predicted that it will take a considerable amount of time for Korea to be re-included in the MSCI Developed Markets Index.

On the 25th, Kim Dong-young, a researcher at Samsung Securities, stated, "There has been no substantial change in institutional improvements yet."

On the previous day (Korean time), MSCI announced the "2022 Annual Market Classification Review." This announcement determines the observation list and confirmed changes for each country’s classification as developed or emerging markets. This year, Korea was not included in the observation list for promotion to developed market status.

Researcher Kim said, "The failure to be listed was actually anticipated through the market accessibility review announced earlier on the 9th," adding, "The evaluation of the Korean market in the preliminary announcement did not improve compared to last year."

MSCI first releases the market accessibility review, which evaluates each country's market operation system, in early June, followed by the comprehensive conclusion of the annual market classification review around the end of June. According to the market accessibility review on the 9th, there were no improvements compared to the previous year, and the evaluation worsened.

Currently, the Korean market system receives negative evaluations in six areas: ▲ Foreign exchange market liberalization level ▲ Investor registration and account set up ▲ Information flow ▲ Clearing and Settlement ▲ Transferability ▲ Availability of Investment Instruments (index data usage rights).

Researcher Kim pointed out, "The main issues are foreign exchange market liberalization, foreign investor registration system, and index data usage rights," adding, "Among these, the most critical is the foreign exchange market liberalization item."

He evaluated, "Since there have been no substantial institutional improvements in the foreign exchange market in recent government activities, the possibility of becoming a candidate for developed market promotion is still low."