Korea Fails to Make Developed Market Grade Again

      June 17, 2009 12:15

      Korea failed again in efforts to join the MSCI list of developed markets. MSCI Barra, the arbiter of international indexes, said Tuesday it reviewed the matter but decided to "maintain the MSCI Korea Index in Emerging Markets." The upgrade will be considered again in June next year.

      In its decision, MSCI Barra remarked, "Korea meets the economic development as well as the size and liquidity requirements." But "investors have continued to highlight some significant accessibility issues for Korea which are not characteristic of Developed Markets."

      Experts speculate that the impact of the decision will be limited. Park Seok-hyun at KTB Securities said, "The decision is based on another consideration as well: since Korea takes up a large share of emerging markets, its sudden integration into developed markets could cause problems in operating the emerging market indexes." He added since the decision was by and large expected, it will have only limited effect.

      Mark Mobius, executive chairman of Templeton Asset Management, said although Korea is one of the largest powers among emerging economies, if it joins the developed markets, it accounts for less than 1 percent. Upgrading would therefore boost the country's pride but bring no real benefits.

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