"Korea's Inclusion in MSCI Developed Markets Index... Outline to Emerge This Month"

Korea Investment & Securities analyzed on June 13 that it will be possible to infer the likelihood of Korea's inclusion in the developed markets category based on the results of the Morgan Stanley Capital International (MSCI) market accessibility assessment to be conducted this month.

Yonhap News Agency

Yeom Dongchan, a researcher at Korea Investment & Securities, said, "The results of MSCI's market reclassification are scheduled to be announced in the early morning of June 25, Korea time," and added, "Among the criteria for classifying developed and emerging markets?economic size, stock market size, and market accessibility?Korea's economic and market size are already at the level of developed countries."

He continued, "Ultimately, the market accessibility assessment will determine whether Korea is included in the developed markets category. MSCI will announce the results of this assessment on June 19 (early morning of June 20, Korea time). Whether Korea can be included in the developed markets index can be inferred on June 20."

Researcher Yeom emphasized, "MSCI has demanded improvements in foreign investor accessibility, such as changes to the dividend process, opening of the foreign exchange market, and expansion of English-language disclosures. Most of these were improved last year, but MSCI's assessment last year stated that about a year of review was needed to determine whether the new systems had been properly established." He added, "Now, with a year having passed, there are not many factors that would worsen MSCI's assessment, so the possibility of Korea's inclusion in the developed markets category has increased."

However, inclusion in the MSCI Developed Markets Index may not immediately lead to capital inflows. He said, "It is difficult to be certain that MSCI inclusion will lead to capital inflows," and explained, "Because Korea's weighting in the developed markets index will decrease, there could be outflows of index funds."

Nevertheless, he stressed, "Despite this, inclusion in the developed markets category is necessary. The process of introducing advanced systems for inclusion in the developed markets index is required. If Korea remains in the emerging markets index, Korea's weighting will inevitably be reduced due to issues such as the increased weighting of China and the inclusion of Vietnam in the emerging markets category."

He stated, "The fastest scenario for Korea's inclusion in MSCI Developed Markets would be being added to the list of candidates (watch list) this month, confirmed for inclusion in June 2026, and actual inclusion in May 2027. However, there is a possibility of delays, so it will take at least two years for actual inclusion."