[KOSPI 10,000 Era] ⑤ Will South Korea Be Included in the MSCI Developed Markets Index... What Are the Remaining Upgrade Tasks for the Korean Stock Market?

MSCI Watch List Decision Expected This Month
"Policy momentum and consistency must be ensured"
Improving access for foreign investors is also needed

Editor's Note
Just a year ago, the idea of the KOSPI reaching the 5,000 level seemed far-fetched, but now the era of 10,000 is within sight for the Korean stock market. This is the result of the semiconductor supercycle, the global investment boom in artificial intelligence (AI), and government-led efforts to reform the capital market structure all coming together. Amid growing concerns about a correction in global semiconductor stocks, The Asia Business Daily presents a five-part series examining the challenges of the "KOSPI 10,000 Era" as seen by international investors and domestic experts. From the current status of the Korean stock market from the perspective of foreign investors, to forecasts from local securities firms and the remaining tasks at hand, we explore whether the Korean market can finally shed the "Korea Discount" label and achieve structural re-rating.

① [Interview] "Among all global AI stocks, Samsung Electronics and SK hynix are the cheapest"
② [Interview] "The key to the 10,000 era is improving ROE"
③ "KOSPI at 10,000 possible this year," say heads of domestic securities firms
④ "To promote long-term investment, tax reform is ultimately needed... Capital gains tax must be revisited"
⑤ Will Korea be included in the MSCI Developed Markets Index? Remaining tasks for upgrading the Korean stock market

Although expectations for the KOSPI 10,000 era are rising, there is still a long way to go before the Korean stock market can reach the stage of a “Korea Premium.” In the market, the decision—due in mid-June—on whether Korea will be added to the Morgan Stanley Capital International (MSCI) Developed Markets Index watch list is being viewed as a critical turning point for the market’s advancement. In this process, the sustainability of capital market reforms, investor protection, and improvements in foreign investor accessibility are being cited as key tasks.

According to the financial investment industry on June 17, MSCI will announce the results of its annual market classification review on June 24. Whether the Korean stock market will be added to the developed markets index watch list is the biggest issue in this announcement. If Korea is successfully included on the watch list this month, there is a scenario in which full inclusion could be announced as early as June 2027, with actual implementation in 2028.

Inclusion in the MSCI Developed Markets Index is significant because it serves as a benchmark for asset allocation by global institutional investors, pension funds, and passive funds. It is evaluated as representing not just symbolic significance,but also a qualitative leap forward for the Korean capital market. It can demonstrate credibility as an advanced market to global investors and expand the foundation for attracting long-term capital inflows.

Currently, the securities industry holds differing views on the likelihood of Korea being added to the watch list. Yang Ji-hwan, Head of Research at Daishin Securities, said, "The likelihood is high," pointing to factors such as the opening of the foreign exchange market, improvements to investor infrastructure, and inclusion in the World Government Bond Index (WGBI) as positive points. However, he cited as a hurdle the fact that the start of 24-hour trading in the foreign exchange market (July 6) is later than the announcement date, meaning that the market’s ability to stabilize trading needs to be confirmed. Shin Jungho, Head of Research at LS Securities, said, "MSCI tends to make decisions after confirming policy changes," adding, "I expect designation to be somewhat difficult this time. The persistent weakness in market accessibility evaluations could remain a stumbling block."

Many emphasize that, above all, reforms to improve the structure of the capital market must continue for Korea to join the ranks of developed markets. Jo Suhong, Head of Research at NH Investment & Securities, said, "The government has pursued policies to improve the market’s structure, including boosting trust in governance reforms and shareholder return policies through amendments to the Commercial Act, as well as enhancing accessibility for foreign investors to the Korean stock market. Policy momentum and continuous, consistent implementation are crucial." Namwoo Lee, Chairman of the Korea Corporate Governance Forum, pointed out, "Qualitative improvement of the board of directors, where the duty of loyalty applies, is a long-term task."

Improving the environment for foreign investors has also been identified as an important task. Kang Sohyun, Head of Capital Market at the Korea Capital Market Institute, said, "It is still difficult for overseas individuals to access the market, so institutional improvements are necessary," adding, "Companies should also make more proactive disclosures. Not only quantitative growth but also substantive improvement is important."

This content was produced with the assistance of AI translation services.