S.Korea not ready for developed market status: MSCI

MSCI says it may adjust the relevant ratings only after checking investor reactions to proposed reforms once fully implemented

Trading floor of Hana Bank in Seoul (File photo)
Trading floor of Hana Bank in Seoul (File photo)
Sang-Yong Park 1
2023-06-09 17:05:57 yourpencil@hankyung.com
Korean stock market

MSCI Inc. regards the South Korean stock market as not ready for its developed market status despite a series of reforms, dampening the country’s hopes to attract more foreign investors by joining the global elite market club.

The global index provider classified South Korea as an emerging market, according to the MSCI 2023 global market accessibility review announced on Thursday.

“For Emerging Markets, lower ratings persist in the Availability of Investment Instruments criterion in Brazil, Turkey, India and Korea,” MSCI said in a statement.

The assessment casts doubts over whether the US firm will place South Korea on the watchlist for an upgrade to a developed market in the MSCI 2023 Annual Market Classification Review scheduled to be released on June 22.

This comes despite the country's unveiling a slew of measures to reform financial markets to reach developed market status.

TO CHECK REACTIONS TO REFORMS ONCE FULLY IMPLEMENTED

The finance ministry earlier this year announced measures to improve the country’s foreign exchange market, which include allowing foreign financial institutions to participate in onshore interbank currency trading upon registration, for example. The Financial Services Commission also unveiled several measures including abolishment of the use of the investor registration code system as legal entity identifiers for corporates.

In addition, both bodies jointly introduced policies aimed at determining the dividend amount to be distributed by companies before the designation of shareholders, who will receive the dividend payouts, in accordance with global standards.

South Korea has yet to carry out all of these measures.

“MSCI may only adjust the relevant ratings once the proposed measures are fully implemented and tested by international institutional investors,” the index provider said.

The country has been categorized as an emerging market since MSCI first granted the status in January 1992.

The country was placed on the watchlist as a developed-market candidate in 2009 but dropped from the list in 2014 given the lack of measures taken to improve market accessibility.

Write to Sang-Yong Park at yourpencil@hankyung.com
 
Jongwoo Cheon edited this article.
#Korea #MSCI #EM #DM #emerging #developed #stock markets #USA #ratings #regulations #foreign exchange #dividends #foreigners #classification #accessibility #review

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