On June 23, 2026, MSCI announced that South Korea would remain classified as an 'emerging market' in its latest review, disappointing expectations for an upgrade to developed-market status.
This decision is significant as it reflects ongoing barriers such as limited convertibility of the Korean won and a rigid investor identification system, which MSCI noted have not been fully resolved despite recent reforms proposed by South Korean authorities.
The Finance Ministry of South Korea expressed its commitment to continue reforms in the foreign exchange and capital markets, aiming for eventual inclusion among advanced economies. Meanwhile, Indonesia's review has been extended until November due to concerns about market accessibility, following MSCI's earlier decision to freeze Indonesian stocks from its indexes.
MSCI indicated that if reforms in Indonesia do not sufficiently address these concerns, it may consider downgrading the country to frontier-market status. This situation underscores the importance of regulatory reforms in influencing market classifications, which can significantly affect investment flows and valuations in both countries