MSCI keeps South Korea at emerging market status, cites FX accessibility

MSCI keeps South Korea at emerging market status, cites FX accessibility SEOUL, June 24 : Global index provider MSCI kept South Korea in its emerging-market category, citing long-standing accessibility issues related to the onshore foreign exchange market in its annual market-classification review. "The Korean won is not deliverable offshore. Even more concerning, onshore liquidity during the extended FX trading hours remains largely insufficient to support tight execution at standards comparable to those observed in developed markets, constraining FX operational flexibility for index replicators and others," the index provider said in a statement. MSCI acknowledged reforms sought by Korean authorities to address the accessibility issue, but said market participants would need time to "thoroughly evaluate the sustained effectiveness of the changes." The index provider removed South Korea from its developed-market watchlist in 2014, citing restrictions on foreign exchange transactions and other accessibility issues. The benchmark KOSPI has doubled in value in the past year to become the world's best-performing stock index thanks to the stellar performance of chipmakers amid the buildout of artificial intelligence infrastructure. On Tuesday, the index plummeted nearly 10 per cent to log the sharpest daily decline since March.