South Korea’s financial regulatory agency has expressed strong optimism that the country’s stock market will soon be included in a major developed market index, following a series of reforms aimed at improving market access.
Kim So-young, vice chairman of the Financial Services Commission (FSC), stated on Monday that there is a “very high possibility” of South Korea’s stock market being added to the developed market category, possibly within this year. Speaking at a press conference in Seoul, Kim noted that while the inclusion might not happen immediately, the likelihood remains strong.
Currently classified as an emerging market by global index provider Morgan Stanley Capital International (MSCI), South Korea’s stock market has long demonstrated attributes more aligned with developed economies. A recent shift in policy could boost the market’s prospects for reclassification. Last month, the country lifted a five-year ban on short-selling stocks, a move previously cited by foreign investors and MSCI as a major barrier to market access.
Kim pointed out that over 90% of the issues raised by MSCI have now been addressed. FSC Chairman Kim Byoung-hwan is scheduled to visit the United States this week, where he plans to meet with foreign investors and discuss the recent improvements to market conditions.
MSCI’s next review of its market classifications is set for June. Typically, markets are placed on a watch list for one to two years before any reclassification occurs.
Efforts to enhance foreign investment in South Korea’s market have been a key focus of the current administration under President Yoon Suk Yeol. Among these measures is the effort to resolve the “Korea Discount,” a phenomenon where domestic stocks are perceived as undervalued compared to their global counterparts.
Kim So-young also addressed a controversial revision to the Commercial Act that was recently vetoed by the government. He stated that amending the Capital Markets Act would be a more effective way to address the issue while minimizing potential side effects.
As South Korea’s financial markets continue to evolve, these developments could play a crucial role in the country’s integration into the global financial landscape.
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