Government and Bank of Korea Form Public-Private Task Force with Financial Institutions
The government and the Bank of Korea are forming a task force (TF) with major financial institutions and Morgan Stanley Capital International (MSCI) to prepare a roadmap for inclusion in the MSCI Developed Markets Index.
According to relevant authorities on the 22nd, the Ministry of Economy and Finance reported this plan to promote inclusion in the MSCI Developed Markets Index during a closed-door briefing to the Economic Division 1 of the National Policy Planning Committee last week. The TF will include the Ministry of Economy and Finance, the Financial Services Commission, the Financial Supervisory Service, the Korea Securities Depository, the Korea Exchange, the Bank of Korea, and major financial institutions, bringing together both public and private sectors. The government explained that close cooperation among all related agencies and the private sector is essential, as institutional reforms and improvements to market infrastructure and practices are necessary for MSCI Developed Markets Index inclusion.
The Presidential Office revealed on the 12th on SNS that President Lee Jae Myung attended an on-site meeting held on the 11th at the Korea Exchange in Yeongdeungpo-gu, Seoul, aimed at eradicating unfair trading in the stock market. Yonhap News Agency
The TF plans to actively share updates on institutional reforms by holding meetings with MSCI and global investor roundtables as needed. The government will also continue to advance the foreign exchange market to ensure that foreign investors face no inconvenience at any stage when investing in the domestic stock market. Requirements for foreigners to open accounts will also be eased. If necessary, additional amendments will be made in parallel to related regulations such as the Foreign Exchange Transactions Regulations and the Financial Investment Business Regulations.
The MSCI index is generally known to be tracked by U.S.-based funds. It is considered to have more influence than the Financial Times Stock Exchange (FTSE) index, which is another global benchmark.
Unlike FTSE, which classifies the Korean stock market as a developed market, MSCI has continued to classify Korea as an emerging market.
The Korean stock market was added to the Watch List, the preliminary stage for inclusion in the MSCI Developed Markets Index, in 2008, but failed to be included due to insufficient market accessibility. In 2014, it was also removed from the Watch List.
With MSCI's annual market reclassification announcement scheduled for June 25 (Korea Standard Time), the market is closely watching whether Korea will be relisted on the Watch List. The resumption of short selling in March this year, along with recent measures to increase openness to foreign investors, are seen as positive factors. The growing trend of companies expanding shareholder returns, spurred by the corporate value-up program launched last year, is also raising expectations.
However, as MSCI pointed out in its annual market accessibility review on June 20 that further improvements are still needed in foreign investor accessibility, there is a growing view that more time will be required before Korea is relisted.
If Korea is classified as a Watch List candidate for the Developed Markets Index, the earliest possible timeline would be an inclusion announcement in June 2026 and actual inclusion by the end of May 2027.
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