FTSE Group said it hasn't made a decision to change the status of Taiwan and South Korea in its global benchmarks, after a Chinese-language newspaper in Taipei reported their markets may not get an upgrade to developed status.
The index compiler won't add shares of Taiwanese companies to its global indexes because the country's regulations bar overseas investors from short-selling and borrowing shares, the newspaper reported, citing an unidentified FTSE official.
An upgrade of South Korea's market status may also be delayed to lessen the impact on international capital flows, the report said.
"There hasn't been a statement and there won't be any statement until next week," Paul Hoff, FTSE's managing director for Asia Pacific, said in Tokyo.
"We haven't made any statements about putting countries in or countries out," he said.
FTSE, owned by the London Stock Exchange and Pearson Plc's Financial Times newspaper, is due to announce the results of a study on market classification on March 24. CLSA Asia-Pacific Markets in a Feb. 10 report said the two markets would be added to FTSE's developed market series.
Money managers overseeing US$2.5 trillion use FTSE Group's indexes to measure their performance, CLSA said. An upgrade to developed market status may prompt some investors see markets in Taiwan and South Korea as less risky and result in more money flowing into their stocks, some analysts have said.
The index compiler has three country classifications: Developed, Advanced Emerging and Emerging.
Taiwan and South Korea, home to Asia's fifth- and sixth-largest stock markets by value, are in the Advanced Emerging category.
Under that status, South Korean and Taiwanese companies are currently included in 24 FTSE indexes used by global money managers, according to LG Investment & Securities Co. A move to Developed Market status would raise the number to 30 indexes, including the FTSE's All-World Developed Index.
The FTSE All-World covers 48 different countries and includes more than 2,700 stocks.
FTSE wrote last November in a consultation paper sent to clients that it would review a proposal that South Korea and Taiwan be "put on the index compiler's so-called Watch List and with the possibility that the two markets may be promoted to developed status in 2005."
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