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Korea Herald
11 hours ago
- Business
- Korea Herald
MSCI sees limited progress in Korea's market accessibility
Lagging FX liberalization, scarce English disclosures dampen Korea's prospects for developed market status Korea's investment barriers for foreign investors remain in place despite recent foreign exchange market reforms, Morgan Stanley Capital International said Friday, casting doubt on the country's prospects for an upgrade in MSCI's index system. In its 2025 Global Market Accessibility Review, released ahead of next week's annual market reclassification announcement, MSCI acknowledged that Korea has implemented 'a series of foreign exchange market reforms,' including allowing global financial institutions to participate in the onshore interbank forex market and extending trading hours to 2:00 a.m. to better align with global time zones. 'Despite these reforms, the registration process continues to face operational hurdles. Moreover, the limited usage of omnibus accounts and over-the-counter transactions has constrained the impact of related regulatory initiatives,' MSCI said. The Korean stock market received a minus rating, indicating improvement is required, in six of the 18 assessment categories, down from seven last year. The decline reflects an upgrade in short-selling accessibility, which was raised to plus following the March 2025 resumption of short-selling activity. 'The ban on short selling was lifted for all Korean-listed securities. MSCI will continue to monitor developments to assess the stability of the regulations over time,' the index provider said. Despite progress, MSCI noted that key hurdles remain in areas such as foreign exchange liberalization, investor registration and account setup, clearing and settlement systems, and the availability of investment products. The firm also pointed out persistent shortcomings in corporate disclosure practices. 'Company-related information is not always readily available in English,' it said, referencing the ongoing phased rollout of mandatory English-language disclosures initiated in 2023. Korea remains classified in the MSCI Emerging Markets Index. To be upgraded to Developed Market status, a country must first be placed on MSCI's watch list for at least one year. Market optimism had grown that Korea might be added to the watch list this year, fueled by a more than 20 percent rally in the Kospi, driven by a retail buying surge and the new administration's push for shareholder-friendly reforms. But MSCI's latest review has tempered those expectations. Goldman Sachs projected that if Korea is added to the watch list, it could be upgraded to Developed Market status by 2026, potentially attracting around $30 billion in capital inflows. 'Inclusion on the watch list seems to be challenging this time,' said Seo Sang-young, a researcher at Mirae Asset Securities. 'What matters more than early inclusion is ensuring the Korean market is prepared and attractive through strong corporate fundamentals and improved accessibility to draw greater capital inflows from global investors.'
Korea Herald
15 hours ago
- Business
- Korea Herald
Foreign accessibility to Korean equity market still constrained: MSCI
South Korea has taken a series of measures to improve foreign accessibility to its equity and currency markets, but such access still remains limited, global index provider Morgan Stanley Capital International said Friday. In its 2025 market accessibility review report, MSCI said the South Korean market has implemented a series of foreign exchange market reforms, such as the extension of trading hours and the allowance of foreign players to participate in the onshore forex market. The global index provider, however, noted there is no offshore currency market and that constraints persist on the onshore currency market. "Despite these reforms, the registration process continues to face operational hurdles. Moreover, the limited usage of omnibus accounts and over-the-counter transactions has constrained the impact of related regulatory initiatives," it said. MSCI raised its rating on Korea's stock short selling to positive from negative as Seoul fully lifted its stock short selling ban, reintroduced in November 2023, in late March while taking new regulatory and technical measures aimed at enhancing oversight of the trading method. The global index provider said it will continue to monitor developments to assess the stability of the regulations over time. South Korea remained on MSCI's emerging market list last year as the country reimposed the ban on stock short selling. Every year in June, MSCI renews its watch lists of emerging markets and developed markets based on the countries' economic development, size and liquidity of equity markets, and market accessibility for foreign investors. This year's lists are due out next week. (Yonhap)
Business Recorder
15-05-2025
- Business
- Business Recorder
7 Pakistani cos added to MSCI FM & SC Indexes
KARACHI: Morgan Stanley Capital International (MSCI) has added seven Pakistani companies to its Frontier Market (FM) and Small Cap Indexes in its latest semi-annual index review, boosting the country's global equity market visibility. Morgan Stanley Capital International (MSCI) is a global research, data, and technology company that provides indices, research, and other services to investors worldwide. As per details cited by Topline Research, the minimum threshold for free float and total market capitalization for selection in the Frontier Market Index was set at $78 million and $155 million, respectively. Three Pakistani companies — Fauji Cement Company, DG Khan Cement Company, and Maple Leaf Cement — have been added to the MSCI Frontier Markets Index, effective from May 30, 2025. This brings the total number of Pakistani companies in the index to 26. Pakistan's weight in the MSCI Frontier Market Index is estimated to be around 6-6.5%, with the addition of the three cement companies expected to attract inflows of $5-8 million, assuming $2-3 billion in funds tracking the index globally. In the Small Cap Index, four Pakistani stocks have been added: Archroma Pakistan, At-Tahur Limited, Engro Polymer & Chemicals, and Pakistan Reinsurance. DG Khan Cement has been moved to the main FM Index, while AGP Pharma and Agritech Limited have been deleted. Topline Research noted that Interloop, Searle Limited, and Abbott Laboratories have been retained in the index despite not meeting the $78 million free float threshold, thanks to the buffer rule. This rule allows for flexibility in index inclusion. The firm drew parallels with a similar past instance where TRG was retained despite not meeting the threshold, only to be removed in a subsequent review. The index review holds particular significance for Pakistan as it continues to rebuild investor confidence following its 2021 downgrade from Emerging Market to Frontier Market status. The inclusion is anticipated to attract moderate passive fund inflows and enhance the visibility of Pakistani equities among global frontier market investors. Copyright Business Recorder, 2025
Express Tribune
14-05-2025
- Business
- Express Tribune
Three cement firms join MSCI frontier index
Listen to article Morgan Stanley Capital International (MSCI) has included three Pakistani companies in its Frontier Market (FM) Index and four more in its FM Small Cap Index as part of the May 2025 index review. MSCI, a prominent global provider of investment decision support tools, announced the results of its May 2025 semi-annual index review, bringing major changes for Pakistan's listed companies in both the MSCI Frontier Markets Standard and Small Cap indices. The changes, effective after the close of trading on May 30, 2025, highlight increased representation of Pakistan in the global investment landscape, particularly in the cement sector. According to Arif Habib Limited (AHL), Pakistan's weight in the MSCI FM Index is now estimated at around 6.1%, reflecting growing investor interest and improving market performance. As per the review, three cement companies - Fauji Cement, Maple Leaf Cement and DG Khan Cement - have been added to the MSCI FM Standard Pakistan Index. With no deletions reported, the total number of Pakistani constituents in the standard index now rises to 26. This includes major blue-chip names such as UBL, Lucky Cement, OGDC, Engro, MCB Bank, HBL, FFC and now the three cement firms. Topline Securities, in its research note, estimated that the combined weight of the three added stocks was 26 basis points (bps) in the FM index. Given that global funds tracking the MSCI's Frontier Index amount to around $2-3 billion, Pakistan could attract an estimated $5-8 million in passive inflows through these additions alone. Interestingly, DG Khan Cement's promotion comes at the cost of its removal from the MSCI Small Cap Index, highlighting its upgraded market status. Meanwhile, the small-cap index saw the addition of four companies – Archroma Pakistan, At-Tahur Limited, Engro Polymer & Chemicals and Pakistan Reinsurance Company. On the flip side, AGP Limited and Agritech Limited have been deleted from the MSCI Small Cap Index. The MSCI Small Cap Index now contains 410 constituents globally, with 67 stocks from Pakistan, making up roughly 16% of the total index and holding a 10.7% weight. Topline noted that companies like Interloop, Searle and Abbott Laboratories were retained in the index despite not meeting the minimum free-float threshold ($78 million in the latest review), citing the MSCI's buffer rule as the likely reason. This rule allows companies slightly below the threshold to remain in the index to minimise excessive churn. The inclusion criteria for this review were stricter compared to the previous one in February 2025, with the minimum free-float market cap raised to $78 million from $72 million, and the total market cap requirement up to $155 million from $145 million. Maaz Azam, Head of Research at Optimus Capital, told The Express Tribune that while the latest MSCI index review brings positive news, the true success for Pakistan will lie in re-entering the emerging markets (EM) category. The MSCI index changes are widely watched by institutional investors and passive fund managers around the world. The increase in Pakistan's representation may not only lead to short-term capital inflows but also signal growing confidence in the country's economic and market fundamentals.
Mint
12-05-2025
- Business
- Mint
The US-UK trade deal: Theatrics took centrestage
Watching the President of the United States, Donald Trump, reveal in the Oval Office what he described as 'a tremendous trade deal" with the United Kingdom reminded me of the 1990s sitcom Seinfeld—it was a show that was literally about nothing. To be clear, it's not a deal. It's more of a framework for an agreement. In other words, US and UK negotiators still have a lot of work to do in coming weeks—perhaps months or even years like these things usually take—to hammer out the details. For now, the idea is to have the UK fast-track American goods through customs and reduce barriers on 'billions of dollars" of agricultural, chemical, energy and industrial exports, including beef and ethanol. Also Read: Nouriel Roubini: US economic tailwinds will help it overcome tariff headwinds More importantly, what was announced fails to accomplish any of the three objectives Trump originally put forward leading up to 2 April's 'Liberation Day' for levying tariffs on America's trade partners. As a refresher, the first was using tariffs (which Americans pay for) to raise tax revenue to help close the federal budget deficit and pay for an extension of the US Tax Cuts and Jobs Act of 2017 that is due to expire this year. The second was to bring manufacturing that migrated overseas back to the US, igniting a new 'Golden Age' of America. The third was to achieve foreign policy goals. None of those three objectives came up in last week's announcement. So, what is the point? Trump's trade war has upended the economy. The uncertainty he unleashed has paralysed businesses and caused measures of consumer confidence to collapse. Companies are openly warning of empty shelves coming sooner rather than later. Last Thursday, a monthly survey by the Federal Reserve Bank of New York showed that the outlook for inflation is soaring among households at the same time as they see future earnings growth slowing significantly. That's a recipe for stagflation. Also Read: Doom loop: Stagflation is the best scenario a tariff-hit US can expect The International Monetary Fund slashed its estimate for how much US gross domestic product will expand this year by 0.9 percentage point, the most of any major economy and a testament to just how much Trump's trade strategy is damaging the country. Little wonder why the Morgan Stanley Capital International (MSCI) US Index of equities has dropped 4.34% this year through last Wednesday while the MSCI All-Country World Index that excludes US equities has surged 9.65%. 'I view tariffs as extraordinarily regressive as a policy," Ken Griffin, the billionaire chief executive officer of Citadel and Republican donor said at the Milken Institute Global Conference this week. 'I actually think they're contrary to the promise that the president made to the American people." Sure, US stocks surged as much as 1.6% last Thursday, but that's more likely a reflection of the market realizing how little countries will have to give up to soften Trump's threatened tariffs. Indeed, as Bloomberg News noted, last Thursday's developments are a sign that Trump is seeking an off-ramp from his plan to raise US tariffs to their highest level in a century. 'Today's action also sets the tone for other trading partners to promote reciprocal trade with the United States," the White House said in its statement. Also Read: A trade war serves nobody: The US and China need to talk The problem for Trump is that America's trade partners have seen how quickly he will backtrack on his trade threats as more Americans sour on his handling of the economy, especially as he openly talks about households having to make sacrifices. 'Somebody said, 'Oh, the shelves, is it going to be open?' Well, maybe the children will have two dolls instead of 30 dolls, and maybe the two dolls will cost a couple of bucks more than they would normally," Trump said during a 30 April US cabinet meeting. Telling Americans they have to tighten their belts is never a winning message for politicians. If Trump stuck to the three objectives initially laid out, all this would be understandable and maybe the economic pain a bit more tolerable. Trump has lately focused, however, on his stubborn belief that America's trade deficit is costing the country money. But as economists such as Nobel laureate Paul Krugman have pointed out, a trade deficit neither means trade is unfair nor that the country with the deficit is losing money. Instead, it is the flip side of large capital flows into the US, flows that help finance US debt and budget deficits. Trump sees it differently. When asked today about his trade war causing cargo ships to stop coming into West Coast ports, potentially costing dock-workers and truckers their jobs, Trump replied 'good," saying it means the US wouldn't be losing money. That sound like the perfect script for a Seinfeld reboot. ©Bloomberg The author is the executive editor of Bloomberg Opinion.
