Seoul fails to make MSCI cut

[THE INVESTOR] South Korea failed to put its stock market back on Morgan Stanley Capital International review list of developed market index candidates after failing to accept requirements from the widely followed global index provider, the financial regulator said Wednesday.

MSCI cited the absence of an around-the-clock market to exchange Korean won with other currencies and delays in Seoul‘s packages of financial reforms that will take effect after 2017, as some of the main reasons, the Financial Services Commission said in a statement.

MSCI has asked Korea to open a market where foreigners can constantly exchange the Korean currency for other currencies or vice versa. But the government refused, saying it could lead to currency market volatility.

However, in other efforts to remove inconveniences for offshore investors, the government said it will adopt the “omnibus account system” for gathering customer trading activities into a single account starting from 2017 and extend the stock and foreign-exchange trading hours by 30 minutes from August, the FSC said. 

Investors also called for an extension of stock trading hours here to effectively manage their portfolios, citing shorter Korea’s stock trading hours compared to Germany and France with eight and a half hours, and eight hours in Singapore.

From 2008 and 2014, Korea advanced to the review list stage each year but couldn‘t obtain development market status. The failures were due to the country’s inability to satisfy a series of requirements made by MSCI. Korea has been on the list of emerging market indices since 2009.

On the same day, China’s local-currency shares, known as A shares, failed to make it to the MSCI‘s emerging markets index.

(investor@heraldcorp.com)