If Added to MSCI Watch List, Korean Stock Market Expected to See 44 Trillion Won Inflow

South Korea Likely to Be Added to MSCI Developed Markets Index Watch List on June 23

On the 17th, the status of the domestic stock market is displayed on the electronic board in the dealing room of the Hana Bank headquarters in Jung-gu, Seoul. 2026.6.17 Photo by Kang Jinhyung

There is growing analysis suggesting that South Korea is highly likely to be added to the Morgan Stanley Capital International (MSCI) Developed Markets Index Watch List, which is scheduled for later this month.

On June 18, NH Investment & Securities released a report titled “The Effect of Korea’s Inclusion in the MSCI Developed Markets Index,” stating, “At the annual MSCI review scheduled for June 23, the likelihood of Korea being added to the Developed Markets Watch List is increasing.”

The Korean government plans to implement 71.8% of the 39 roadmap tasks by the first half of the year. Accordingly, if Korea is added to the MSCI Developed Markets Index Watch List in June, it is highly likely to be included in the index after an observation period of approximately 24 months, in June 2028. The report emphasized that whether Korea succeeds in improving the level of liberalization of its foreign exchange market during the observation period will be a key factor for inclusion.

NH Investment & Securities researcher Kyu Jin Kim stated, “If Korea is added to the Watch List, the momentum for institutional reforms according to the developed market index roadmap will continue through 2027. Among these reforms, the stability of the exchange rate is expected to be strengthened through the operation of the foreign exchange market and the 24-hour offshore won settlement system.”

He also analyzed, “Looking ahead, we expect domestic earnings volatility to stabilize, particularly in the IT sector, which could lead to mid- to long-term valuation expansion. The inflow of funds resulting from higher valuations is expected to amount to approximately $29.2 billion (44 trillion won) in passive funds.”

However, he predicted, “There is a possibility of capital outflows when the MSCI Developed Markets Index is announced in 2028.” He cited recent surges in funds tracking the emerging markets index and a higher minimum market capitalization requirement for index inclusion as the reasons for the potential outflow, estimating that the outflow could reach about $5.2 billion (8 trillion won) in passive funds.

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