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The information provided on EL7.AI is for educational and informational purposes only and does not constitute financial advice.
In a move that disappointed investors, MSCI kept South Korea in its Emerging Markets category, denying the long-anticipated upgrade to developed market status. The decision came despite widespread expectations that the country would meet the criteria during the index provider's periodic review, according to a CNBC report. The classification directly impacts institutional capital flows, as emerging-market benchmarked funds will maintain their current weighting in South Korean equities.
The annual MSCI review takes place amid a rigorous assessment of criteria such as market accessibility, regulatory transparency, and currency stability. South Korea had implemented reforms to improve market access, including extended trading hours and relaxed foreign investment restrictions, but MSCI deemed the criteria still unmet. In contrast, Taiwan received a partial upgrade in previous years, highlighting the divergence in standards across comparable markets.
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Sign InInvestors will watch for the next MSCI review scheduled for November, where any new developments regarding South Korea's classification could be announced. In the absence of specific price data, the focus remains on further steps the Korean government may take to meet requirements, such as improving settlement infrastructure or increasing foreign-exchange policy transparency. Any progress in these areas could revive the upgrade narrative and attract fresh inflows.