MSCI acknowledges South Korea's capital market reforms; developed market status pending

South Korea's government stated it anticipates the nation's stock market will eventually be included in the MSCI developed countries index through persistent reforms in its foreign exchange and capital markets. This statement follows the MSCI's 2026 annual market classification results, which did not place the Korean market on the observation list for developed country status.

Finance and Economy Ministry and the Financial Services Commission officials acknowledged the MSCI's awareness of South Korea's efforts to advance its foreign exchange and capital markets. However, they understood the exclusion from the observation list was due to some improvement measures still being in progress and the time required for the market to fully experience the effects of completed reforms.

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If we continue to steadily pursue foreign exchange and capital market reforms according to our own needs and schedule, we expect that we will be naturally included in the MSCI developed markets index.

The government emphasized its commitment to pursuing reforms based on its own needs and timeline, believing this will lead to natural inclusion in the MSCI developed markets index. They plan to quickly activate regular communication channels with major international investors to monitor the practical application of improvement measures and incorporate on-site feedback.

The MSCI cited limitations in the convertibility of the Korean won in offshore foreign exchange markets as a reason for not upgrading the market. While acknowledging the measures announced by South Korean authorities, investors reportedly felt that fundamental issues remained unresolved.

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While the announcement of these measures is a step in the right direction, what is important for international institutional investors is the consistent implementation and sustained effect of these measures across the market.