, a company that creates market benchmarks, has been doing for three decades. South Korea was the 13th country to join its Emerging Market Index, which now counts 24 members. Some have since been relegated to a “frontier” basket , shunted to “standalone” markets or even dropped altogether . Less glitzy economies than South Korea’s, such as Greece and Portugal, were elevated to’s Developed Market index years ago. South Korea therefore thinks it is overdue a promotion.
Such reforms aim to make South Korea’s financial markets more dynamic—a worthy goal in itself. But the government reckons inclusion in’s elite benchmark is also worth angling for, because it would bring with it a vast influx of cash from foreign investors. About $3.5trn of assets under management, spread across the globe, currently track’s Developed Market index—nearly twice as much as the money following its emerging-market cousin, according to Goldman Sachs, an investment bank.
Some critics paint even the latest batch of measures as half-hearted. South Korea has ruled out some changes thewould like, such as removing limits on foreign ownership in key industries and loosening restrictions on short-selling. And political whims continue to make investors queasy. Last year bond markets experienced a wild few days after a provincial governor refused to honour the region’s debts.