South Korea has been classified as an emerging market by MSCI since 1992. More than 30 years later, nothing has changed.
The index provider announced it would maintain South Korea’s position in its emerging-markets index, declining to place the country on a watchlist for potential reclassification to developed-market status.
What happened and why it matters
MSCI’s market classification reviews can redirect tens of billions of dollars in global capital. When a country moves from emerging to developed status, passive funds that track MSCI’s developed-market indexes are essentially forced to buy in. Analysts have estimated that a South Korea upgrade could trigger passive investment inflows of up to $30B.
The decision not to even add South Korea to the watchlist means the upgrade process hasn’t formally begun. Countries typically need to spend at least a year on the watchlist before MSCI conducts a full reclassification review.
