MSCI Inc.

New York Stock Exchange
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Slightly Bullish +15

The world’s top-performing stock market still isn’t a developed market. Here’s why, according to the MSCI chief - CNBC

🇰🇷 MSCI kept South Korea in its Emerging Markets category, denying the country's request to move to Developed Markets status.

💬 MSCI CEO Henry Fernandez stated that while South Korea is economically advanced, its equity markets lack the currency trading flexibility of developed nations.

🕒 The main barrier is that investors cannot buy or sell Korean won outside of Seoul's office hours, hindering global portfolio rebalancing.

📉 MSCI expressed doubts about whether a proposed 24-hour dollar-won spot market on July 6 will offer sufficient liquidity for night-time trading.

🏛️ Other cited issues include rigid investor identification systems and restrictions on in-kind transfers and off-exchange transactions.

📊 South Korea's Kospi index was the top-performing equity index globally in 2025 but remains classified as emerging by MSCI.

🔄 FTSE Russell classifies South Korea as a developed market, creating a divergence between major index providers.

🗣️ Fernandez noted that reforms are underway but investors have communicated that underlying structural issues remain unresolved.

Bullish Signals
  • South Korea's Kospi index was the best-performing equity index in the world in 2025 and has surged 112% so far this year.
  • The country is preparing to launch 24-hour trading in the dollar-won spot market on July 6, which could improve accessibility for global investors.
  • South Korea is classified as a developed market under the FTSE Equity Country Classification scheme, indicating strong fundamentals recognized by rival index providers.
Risk Factors
  • MSCI maintained South Korea's emerging market status due to trading restrictions on the Korean won that prevent convenient currency conversion outside Seoul office hours.
  • The index provider cited rigid investor identification systems and restrictions on in-kind transfers as unresolved structural barriers to an upgrade.
  • MSCI expressed skepticism about whether a 24-hour won market will provide enough liquidity and tight bid-ask spreads for global investors trading at odd hours like 2 AM.
Full Analysis
MSCI has maintained South Korea's classification as an emerging market despite the country's strong economic performance and hopes for an upgrade. MSCI CEO Henry Fernandez explained that while South Korea is advanced economically and technologically, its equity markets exhibit significant attributes of emerging markets, specifically regarding currency trading restrictions. The primary obstacle preventing an upgrade to developed-market status is the inability to trade the Korean won outside of Seoul's office hours. Fernandez highlighted that global index fund managers require the ability to buy and sell currencies at their convenience in major financial hubs like London or New York, a flexibility currently unavailable in Korea due to trading hour limitations. Beyond trading hours, MSCI cited other structural issues including rigid investor identification systems, restrictions on in-kind transfers, and limits on investment products. Although South Korea plans to launch 24-hour trading in the dollar-won spot market on July 6, MSCI remains skeptical about whether this will provide sufficient liquidity and tight bid-ask spreads for global investors at odd hours like 2 AM. South Korea's Kospi index was the world's best-performing equity index in 2025 and has surged significantly this year, yet it remains classified as an emerging market under MSCI while being recognized as developed by FTSE Russell. The index provider noted that investors have communicated that underlying issues preventing a full upgrade have not been fully resolved.