South Korea's MSCI developed-market upgrade possible with continued reforms, government says

South Korea has again failed to win inclusion in MSCI's developed-market index, but the country's financial authorities said Wednesday that continued reforms to the foreign exchange and capital markets would eventually open the door to an upgrade.

The Ministry of Finance and Economy and the Financial Services Commission issued a joint statement on the 2026 MSCI annual market classification review, saying they expect South Korea to "naturally achieve inclusion in the MSCI developed-market index" if the country consistently pursues foreign exchange and capital market reforms "according to our own needs and timeline."

The two agencies said MSCI has acknowledged the foreign exchange and capital market modernization policies South Korea has pursued and the progress made so far.

However, they said some reform tasks remain in progress, and even measures already completed need more time before market participants can feel their effects — factors they believe led MSCI to leave South Korea off the developed-market watchlist this year.

The Ministry of Finance and Economy and the Financial Services Commission said they would "promptly activate regular communication channels with major overseas investors to monitor how improvement measures are actually being used and reflect on-the-ground feedback."

MSCI released its 2026 annual market classification review on Tuesday, keeping South Korea off the developed-market watchlist and citing continued restrictions on offshore won trading, among other reasons. South Korea's stock market remains classified as an emerging market alongside China, India and others.

MSCI said it "acknowledges the measures announced by Korean market authorities to address longstanding concerns," but added that "investors have indicated that the fundamental issues have not been fully resolved" — the reason it gave for not adding South Korea to the developed-market watchlist.