South Korea won “developed” status from FTSE Group, enabling its stock market to attract more of the estimated US$3 trillion in funds that track the index provider’s global benchmark indexes.
The upgrade from the country’s “advanced emerging” rating takes effect in September next year, Mark Makepeace, chief executive of the London-based FTSE, told reporters in Seoul yesterday.
Becoming a developed market may lead to as much as US$16 billion flowing into South Korean stocks, bourse operator Korea Exchange Inc said in a statement yesterday.
South Korea has been on FTSE’s “watch list” for a possible upgrade since 2004. The country has tried to raise the perception that its stock market is ready for developed status by easing restrictions on over-the-counter transactions and making currency trading more convenient for overseas investors.
South Korean stocks will represent about 2 percent of FTSE’s developed-market indexes, Makepeace said. That compares with the nation’s 14.46 percent weighting in the emerging-market indexes as of the end of July.
FTSE’s promotion of South Korea may also “positively influence” MSCI Inc’s decision whether to include the nation in its developed-market indexes, the Korea Exchange said in the statement.
The New York-based index provider, which estimates it has more than US$3 trillion in funds linked to its global benchmarks, will decide by June whether to elevate South Korea and Israel from its emerging-market gauges.
Separately, Taiwan remains on FTSE’s “Watch List” for a possible upgrade to “developed,” from “advanced emerging,” while Greece is still being considered for a demotion to “advanced emerging” from “developed,” the index provider said in a statement.
Argentina and Colombia will be added to the “Watch List” for possible downgrade to “frontier” status from “secondary emerging,” while Iceland will be considered for inclusion in the “advanced emerging” indexes, FTSE said.
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