Korea's stock market failed to be included in the Morgan Stanley Capital International (MSCI) developed markets (DM) index.
In the "2026 annual market classification results" released by MSCI on the 23rd (local time), Korea was not placed on the watchlist for inclusion in the developed markets index. The judgment was that Korea's market accessibility still falls short of developed-market standards.
MSCI said, "We recognize the measures released by Korea's financial authorities to address long-standing concerns," but noted, "Investors view that fundamental issues have not been fully resolved."
Analysts say the key stumbling block was that the won is not a currency actually settled in the international foreign exchange market. MSCI pointed out, "The won is not deliverable offshore."
MSCI also said that Korea's trading and settlement infrastructure for foreign investors and its short-selling system need improvement.
In response, the financial authorities said, "If we push ahead with foreign exchange and capital market reforms, we could be included in the MSCI developed markets index."
The Ministry of Finance and Economy and the Financial Services Commission said in a statement on the results of the 2026 MSCI annual market classification assessment distributed that day, "MSCI is aware of the Korean government's efforts and achievements in the modernization of the foreign exchange and capital markets."
The two agencies said, "In some tasks, institutional improvements are still underway, and even for completed tasks, more time is needed for the market to feel the effects, so we understand that Korea was not added to the watchlist this year."
The Ministry of Finance and Economy and the Financial Services Commission (FSC) emphasized, "We will swiftly activate regular communication channels with major overseas investors to check the actual use of the improvement measures and reflect on-site feedback."