SEOUL, June 24 (AJP) - South Korean financial authorities said Wednesday that it expects to be included in MSCI’s developed-market index in due course if it continues to press ahead with foreign exchange and capital market reforms, after the country again failed to make the index provider’s watchlist for a possible upgrade.
The Ministry of Economy and Finance and the Financial Services Commission said in a joint statement that MSCI recognizes the government’s efforts and progress in modernizing Korea’s foreign exchange and capital markets.
The two agencies said some reform measures are still under way, while even completed measures need more time before their effects are fully felt by investors.
The government said it will quickly activate regular communication channels with major overseas investors to review how reform measures are being used in practice and reflect market feedback.
MSCI said in its 2026 annual market classification review released Tuesday that Korea will remain classified as an emerging market, without being placed on the watchlist for a possible upgrade to developed-market status.
Korea will therefore stay in MSCI’s emerging market index alongside markets such as China and India.
MSCI acknowledged measures announced by Korean authorities to address long-standing investor concerns, but said investors still believe fundamental issues have not been fully resolved.
The index provider cited continued limits on offshore won trading and insufficiently tested liquidity during extended onshore foreign exchange trading hours as key reasons behind Korea’s failure to make the watchlist.
It also pointed to limited use of omnibus accounts and in-kind transfers, as well as operational burdens related to short-selling rules and settlement procedures.
Korea was added to MSCI’s emerging market index in 1992 and placed on the developed-market watchlist in 2008, but failed to win an upgrade due to issues including the absence of an offshore won market, foreign investor registration requirements and restrictions on index data usage.
MSCI removed Korea from the watchlist in 2014, and the country has since remained outside even the preliminary review stage for developed-market inclusion for more than a decade.
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