South Korea is pushing to be included in the MSCI Developed Markets Index to escape the chronic ‘Korea Discount’. On the 9th, the government unveiled a comprehensive roadmap for foreign exchange and capital markets to achieve this goal.
The government aims to improve the structure of the foreign exchange and capital markets and establish an advanced investment environment. If the process goes smoothly, the inclusion decision will be made next year, and MSCI Developed Index tracking funds are expected to flow into the country during President Lee Jae-myung’s term.
MSCI classifies major global stock markets into four groups: Developed Markets, Emerging Markets, Frontier Markets, and Standalone Markets. South Korea was designated as an observation country for the Developed Markets Index in 2008 but was excluded from the list in 2014.
The government plans to reform foreign exchange transactions, securities investment systems, and market infrastructure to meet international standards and make it easier for foreign investors to access the Korean market. The foreign exchange market will be open 24 hours, and a new offshore won settlement system will be established to allow won settlements between foreign institutions during nighttime hours, with full implementation expected next year.