South Korea was kept as an emerging market at MSCI Inc as the index provider skipped the nation for an upgrade for a second year. Taiwan, under a similar review, also retained its status as a developing market.
MSCI left South Korea’s status unchanged in June last year and said it would evaluate the nation for an upgrade as a developed market this year.
The latest review again cited the “rigidity” of its investor identification system and the lack of an active offshore market for the country’s currency, as well as anti-competitive practices relating to stock market data.
The decision means the nation will lose out on purchases of equities in Asia’s sixth-biggest market by investors who are restricted to developed-nation equities because of their perceived lower risk. The South Korean market was assigned “developed” status by FTSE Group, a rival index compiler, in September last year.
The benchmark KOSPI closed 0.47 percent, or 8.2 points, lower at 1,731.48 in Seoul yesterday.
‘IRRELEVANT’
“On the stock data issue raised by MSCI, we believe that’s an irrelevant issue for upgrading the nation to developed status,” Kong Do-hyun, a spokesman for Korea Exchange Inc, said by telephone yesterday. “Korea Exchange will continue its consultation with MSCI in a direction that will help further develop [the] South Korean market.”
MSCI indexes are tracked by investors with an estimated US$5.2 trillion in assets, compared with about US$4 trillion for FTSE gauges, according to a May 26 report by Shinhan Investment Corp.
South Korea represents 13.2 percent of the MSCI Emerging Market Index, the third-largest after China and Brazil, according to a May 19 report by Morgan Stanley.
South Korea is better off staying as an emerging market as its weighting among developed markets will be “very small,” Credit Suisse Group said.
BIG FISH, SMALL POND
“It’s better to be a big fish in a small pond,” Sakthi Siva, an analyst at Credit Suisse who is the top-ranked Asia strategist in Institutional Investor’s poll this year, said in a briefing in Seoul yesterday.
MSCI said it would review South Korea for a possible upgrade next year. Countries that were elevated to developed market status by MSCI in recent years include Greece and Israel.
Taiwan will also stay under review for a potential upgrade to developed status next year, the index provider said. The United Arab Emirates and Qatar, which retained their frontier markets status, will remain under review for a potential reclassification to emerging markets, it said.
The so-called frontier markets typically have less-developed economies and financial markets than emerging markets, and have more restrictions on foreign stock ownership.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in