Taiwan was retained in the “Advanced Emerging” market category in the latest annual country classification review released by the FTSE Group yesterday.
The nation has been on the global index provider’s watch list for an upgrade for several years, but FTSE said in a press release that Taiwan would be reviewed again in September next year for possible promotion to the category of “developed” market.
“I believe the result should not have a negative impact on the stock market,” said Kevin Chung (鐘國忠), an analyst with Jih Sun Securities Investment Consulting Co (日盛投顧). “An upgrade by FTSE to ‘developed’ market would mean the market is less risky for investors and therefore they would add more local shares to their portfolios, but Taiwan has to open up its markets more to gain that status, which could be a risk to Taiwan as the market is small and more vulnerable to ups and downs.”
South Korea was upgraded to “developed” market last year, joining Hong Kong, Japan and Singapore.
Under FTSE’s quality of markets criteria, the Taiwanese stock market was less open to global investors, with six categories listed as “restricted,” including a “free and well-developed foreign exchange market,” “stock lending permitted” and “off-exchange transactions permitted.”
In the FTSE’s latest review, the Czech Republic, Malaysia and Turkey were upgraded to “advanced emerging” from “secondary emerging” markets, while China, Colombia, Greece, Kazakhstan and Kuwait are still on the “watch list” for possible inclusion or promotion.
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