Head of index compiler MSCI Inc. said Monday that the Korean stock market’s failure to achieve developed status stems from its “inefficiencies."
“There are two important areas that need further development,” said Henry Fernandez, chairman and CEO of MSCI, at a news conference held in Seoul to mark the official launch of the company’s Seoul office.
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Henry Fernandez |
Fernandez said the first issue was the structural problems that hamper the market access for international investors who want to rebalance their equity global portfolio in real-time. For instance, when an investor in London wants to execute a worldwide transaction at the end of a quarter, Seoul is not fully ready to handle the necessary foreign exchange trade linked to equity rebalancing in real time.
Second, the Korean market still poses logistical and administrative problems for foreign investors, he said.
Korea was included in the MSCI Emerging Markets Index on Jan. 7 in 1992. Over the past two decades, its weight went up from 5 percent to 15 percent, achieving what Fernandez called a “dramatic increase.”
Korea has been on the candidate group for a possible upgrade from the emerging market to the advanced nation’s status since 2008, but found itself stuck with its present status for three years in a row, disappointing investors here.
Asked whether the launch of the Korea office marks a higher chance for the country’s inclusion in the developed MSCI index, Fernandez said it was a separate issue.
“That’s a process that is handled by our research department and goes through very rigorous consultation with investors," he said.
"Having said that, it’s important to note the fact that we believe that the development of the country continues strongly and the development of the capital market goes strongly.”
The Korean office is also designed to accelerate communications with Korean authorities and investors so that it can provide investment-related tools and services, he said.
MSCI Korea’s office is to be headed by its country manager Lee Seung-eun, who also joined the press conference and explained the company’s plans to strengthen its equity index and ETF business services targeting local clients including banks, brokerages and pension funds.
MSCI plans to sign on new clients here for its institutional shareholder service.
On Monday, MSCI also launched the MSCI Kukje Index Monday, a market capitalization weighted index designed to measure the equity market performance of developed and emerging markets excluding South Korea.
The index, designed for the Korean market, is intended to serve as a tool for Korean investors wishing to access the international equity market opportunities, MSCI said .
By Yang Sung-jin (
insight@heraldcorp.com)
