The decision dashed hopes that Seoul could be included in MSCI’s Developed Markets watchlist, a crucial step before a market can be upgraded to developed-market status. <\/p>\n
For Indonesia, the extended review comes after MSCI raised concerns about market accessibility earlier this year and froze the country’s stocks from its indexes in January, citing investability concerns. <\/p>\n
MSCI said that it would continue evaluating reforms introduced by Indonesian authorities, but should these measures prove insufficient, the index provider would “consider a range of options for the appropriate treatment for the\u00a0Indonesia\u00a0market,” including a potential downgrade to frontier-market status. <\/p>\n
Following the review, Indonesia’s financial regulator reportedly said<\/a> that it would “ensure that the reforms that have been and are currently being rolled out can be comprehensively understood by the global investment community.”<\/p>\n Korea discount<\/p>\n In South Korea’s case, MSCI said limited convertibility of the Korean won in the offshore currency markets remained a key barrier to reclassification.<\/p>\n The index provider also cited a rigid investor identification system, restrictions on in-kind transfers and off-exchange transactions, and limits on investment products due to restrictions governing the use of exchange data.<\/p>\n While MSCI acknowledged measures announced by South Korean authorities to address those concerns, it said “investors have communicated that the underlying issues have not been fully resolved.”<\/p>\n The country is preparing to launch 24-hour \u200ctrading<\/a> in the dollar-won spot \u200bmarket on \u200bJuly 6, the \u200blatest step \u200bto open up its \u2060foreign exchange market to overseas investors.<\/p>\n Seoul has long sought inclusion in MSCI’s Developed Markets category. Analysts previously told CNBC that an upgrade could help resolve the so-called “Korea discount<\/a>,” a term used to describe the lower valuations often assigned to South Korean stocks compared with global peers.<\/p>\n South Korea’s Finance Ministry said the country was not added to the watchlist this year because some reforms were still underway and completed measures needed more time to show results.<\/p>\n The ministry said it would continue pursuing foreign exchange and capital market reforms, adding that inclusion in MSCI’s developed-market index would follow if the changes continued according to South Korea’s needs and timeline.<\/p>\n
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