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News Topical, Digital Desk : South Korea's efforts to attract more capital from global investors have suffered a major setback. In its annual review, American firm MSCI (Morgan Stanley Capital International) has still kept Korea in the category of emerging market. MSCI said that Korea still lacks foreign exchange (forex) reforms for foreign investors and the availability of investment related instruments in the market is limited. Therefore, Korea cannot be given the status of developed market at present.
What does MSCI say?
"We are monitoring the steps taken to improve access to the Korean market," MSCI said in a statement issued on June 24.
Setback to Korea's hopes - South Korea has long been trying to be included in MSCI's Developed Market list. This upgrade can help it get more funds from foreign investors, which will help improve the valuation of local companies.
The Korean stock market is known globally as the "Korea Discount", where companies are valued below their actual value, while their profitability is at par with global competitors.
What has Korea done so far?
The ban on short selling was lifted The trading hours of Korean Won were extended Efforts were made to increase transparency for foreign investors Although MSCI acknowledged these efforts, it believed that more improvements are still needed to facilitate foreign investors. Korea's status in history MSCI placed Korea on the developed market watchlist in 2009 but removed it in 2014 because of several fundamental issues such as currency trading hours. According to local media reports, Korean officials did not expect an upgrade this year. They have now formed a new task force targeting a 2026 review. How was the market? Meanwhile, Korea's stock market is performing strongly. The KOSPI index is up 30% so far this year, making it one of Asia's fastest growing stock markets. The index rose 3% on Tuesday. MSCI's review makes it clear that despite being ahead in technology and manufacturing, South Korea will have to provide more transparency and facilities for foreign investors. For now, it will have to remain as an emerging market for at least one more year.
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