TL;DR summary:
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South Korea will publish a roadmap early next year for MSCI index upgrade.
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The move targets long-standing accessibility gaps that currently keep Korea as an emerging market.
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Inclusion could attract substantial foreign capital and narrow the “Korea discount.”
South Korea’s Ministry of Economy and Finance has confirmed it will announce a detailed roadmap early next year aimed at securing inclusion in the MSCI Developed Market Index, a long-standing goal that could reshape international investor flows into the country’s capital markets.
Despite its status as Asia’s fourth-largest economy, South Korea has remained classified as an emerging market by MSCI for over a decade, even being dropped off the Developed Markets watchlist in 2014 due to accessibility constraints and regulatory barriers. While other benchmark providers such as FTSE Russell categorise Korea as developed, MSCI’s classification has a unique impact on passive investment flows, with analysts estimating that an upgrade could attract billions of dollars in foreign capital as index-linked funds adjust their allocations.
The government’s planned roadmap is expected to focus on market accessibility enhancements, targeting structural issues that MSCI has repeatedly flagged, such as restrictions in the foreign exchange market and investor access. Recent reforms, including expanded foreign participation and potential FX market opening measures, underscore Seoul’s broader strategy to make its markets more investable.
South Korean President Lee Jae‑myung has publicly framed this push as part of ending the so-called “Korea discount,” a term used to describe the valuation gap between Korean equities and peers in developed markets. In speeches abroad, Lee linked MSCI inclusion to boosting investor confidence and deepening global capital integration.
An upgrade to the MSCI Developed Market Index does not happen overnight. It typically involves an interim watchlist phase, giving global investors time to adjust before full inclusion, often followed by an extended evaluation of reforms in practice.
For South Korea, success would not only reflect its economic maturity and market infrastructure but could also unlock significant passive inflows, improve liquidity, and strengthen its standing in the global investment landscape
