Korea fails to join MSCI developed market index again, "concerns remain unresolved"

South Korea's stock market has once again failed to achieve inclusion in the MSCI developed markets index, a move that would have elevated its status and potentially attracted more foreign investment. The Morgan Stanley Capital International (MSCI) announced its annual market classification review, maintaining Korea's position within the emerging markets category.

MSCI acknowledged the measures announced by Korean authorities to address long-standing concerns. However, the index provider stated that investors believe fundamental issues remain unresolved. This sentiment from the investment community has been a significant barrier to Korea's reclassification.

Specific concerns highlighted by MSCI include the limited convertibility of the Korean won in offshore foreign exchange markets and insufficient liquidity in the nighttime foreign exchange market. These structural issues are seen as critical impediments to fully integrating the Korean market into developed global financial systems. The failure to meet the criteria means Korea will not be included in the list of countries under observation for potential upgrade.

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We are aware of the measures announced by the Korean authorities to address persistent concerns. However, investors have conveyed that fundamental issues have not yet been fully resolved.