SEOUL, SOUTH KOREA – 09 DECEMBER: People walk past the Korea Exchange (KRX) building, as stock markets in Asia as a whole have been affected by the intensifying political turmoil over president Yoon Suk Yeol’s role in martial law, in Seoul, South Korea, on 9 December, 2024. The Korea Composite Stock Price Index (KOSPI), Hong Kong’s Heng Sang, the Shanghai Composite index, as well as stocks in countries such as Australia, China, India and Thailand have seen a decline in their respective index amid the political crisis in South Korea and Syria. (Photo by Daniel Ceng\/Anadolu via Getty Images)<\/p>\n
Anadolu | Anadolu | Getty Images<\/p>\n
Index provider MSCI kept South Korea classified as an “emerging market” in its most recent review<\/a> on Tuesday, while extending its assessment of Indonesia’s status until November. <\/p>\n 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 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 it would continue pursuing reforms aimed at securing an upgrade.<\/p>\n “If we continue to implement reforms in the foreign exchange and capital markets on our own schedule, we believe we can be included among advanced economies,” the ministry said,\u00a0according to Yonhap.<\/a> <\/p>\n This is a developing story; please check back for updates.<\/p>\n