MSCI logo [REUTERS]
Korea’s inclusion in the Morgan Stanley Capital International (MSCI) Developed Markets Index was once again rejected. It did not even make it onto the watch list, which lists the pool of candidates for the index.
MSCI announced the results of its “2025 Annual Market Classification Review” on its website on Tuesday. The organization classifies global equity markets into developed, emerging and frontier categories, which serve as key benchmarks for institutional investors and influence capital flows.
Korea, currently classified as an emerging market along with China, Indonesia, Malaysia and Brazil, saw no changes to its status.
In its 2025 market accessibility review, MSCI stated that it will monitor whether the Korean market makes necessary changes to be considered a developed market.
MSCI will “determine whether these measures have replicated the outcomes of fully operational offshore FX markets such as those found in developed markets,” read the report.
MSCI acknowledged Korea’s regulatory and technical improvements, such as removing restrictions that had been imposed to crack down on illegal short selling and other unfair trading practices. However, it noted that “while market activity has recovered, investor concerns remain regarding the operational burden of compliance and the risk of abrupt regulatory shifts.”
“As a reminder, potential reclassification consultations require that all issues have been addressed, reforms have been fully implemented and market participants have had ample time to thoroughly evaluate the effectiveness of the changes,” the review said.
In a separate market accessibility assessment released on June 20, Korea’s rating for short-selling accessibility was upgraded from “minus” to “plus.” However, other areas such as currency convertibility, investor registration, account setup, clearing and settlement systems and product availability still required improvement.
To be included in the MSCI Developed Markets Index, a country must first remain on the watch list for at least one year. Korea, which was classified as an emerging market in 1992, was added to the watch list in 2008 but was later dropped in 2014 due to insufficient market accessibility.
As Korea failed to make the list again this year, the next opportunity to be considered will come in June 2026.
Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY HYEON YE-SEUL [[email protected]]
