Date
2011.06.22
The move represents another setback for South Korea. MSCI left South Korea's status unchanged in 2009 and 2010 due to the "rigidity" of its investor identification system and lack of an active offshore market for the Korean won.
"Accessibility issues ... in particular the lack of full currency convertibility, including the absence of active offshore currency markets, and issues linked to the rigidity of the ID systems, remain unchanged from the view of international institutional investors," MSCI said in a statement on its Web site late Tuesday (central European time).
Following the decision, South Korea's stock market, the 16th-largest in the world by market capitalization, will continue to be tracked on the MSCI Emerging Markets Index along with 20 other countries.
MSCI tracks stock market performances of 76 economies classified into three market categories -- developed, emerging and frontier markets.
The retention comes on the heels of a tug-of-war between the index provider and the Korea Exchange (KRX), which was blamed as the biggest block for South Korea's graduation into developed market status.
MSCI had requested to use the KRX's real-time market data to create and sell derivatives to offshore investors. But the KRX, which operates the world's largest derivatives market by trading volume, has been reluctant to give in on the data rights issue. Other areas previously highlighted by MSCI has also shown little change since last year.
Market watchers have been split on the inclusion. Some remained skeptic on the upgrade, citing the KRX's strong stance on the data rights issue. Others, however, had argued South Korea is likely to graduate from emerging market status since it has been tabbed as a developed market by the Financial Times Stock Exchange (FTSE) Group since 2009.
South Korea is the only country on the FTSE Developed Markets Index that is not included in the MSCI Developed Markets Index.
Source: Yonhap News (June 22, 2011)