Overview

• MSCI’s 2025 Annual Market Classification Review kept South Korea in the emerging market group and excluded it from the watch list for a potential developed market upgrade.
• The index provider cited limited convertibility of the Korean won in offshore markets alongside compliance burdens and risk of abrupt regulatory shifts as key barriers to reclassification.
• Regulatory reforms such as lifting short-selling bans, extending trading hours and allowing foreign participation in the onshore FX market have improved accessibility but did not resolve currency convertibility constraints.
• In a separate June 20 assessment, MSCI upgraded South Korea’s short-selling accessibility rating from “minus” to “plus.”
• President Lee Jae Myung’s administration has established a task force with major financial institutions to roadmap further market and forex reforms ahead of the next June 2026 review.