More than 10 years after joining the OECD, South Korea is still an emerging market.
FTSE (the company owned by the Financial Times and the London Stock Exchange) has recently been reviewing the constituent countries in its various global equity indices.
In drawing up the indices, they categorise countries into three lists: Developed, Advanced Emerging, and Secondary Emerging.
In the first list there’s the obvious candidates like the USA, Switzerland, Greece, Japan, UK… Hang on. Greece? OK, FTSE have warned Greece that they’re on the watch list for relegation into the lower divisions.
In the third division there’s Peru, China, India, Russia and others. Pakistan is about to be expelled into the nether regions.
In between, the second division countries are Brazil, Mexico, South Africa, Taiwan and South Korea. These “Advanced Emerging” countries are about to be joined by upwardly mobile Hungary and Poland.
Both Taiwan and South Korea have been on the “watch list” for promotion to the first division since 2004, but have never quite made it (unlike Israel, who somehow are about to move up after only one year).
South Korea will continue to be assessed for promotion from Advanced Emerging to Developed status. Significant changes have been made to regulations and investment procedures in South Korea to assist international investors. In addition, an improvement plan has been published to remove restrictions on the free delivery of securities between accounts and to ease off-exchange transactions. Once these improvements are implemented, the only outstanding quality of markets criterion for Developed markets not then being met would be the removal of restrictions in the foreign exchange market.