After one of its most volatile weeks in years, South Korea’s stock market is approaching a milestone it has long been chasing: a potential path into MSCI Inc.’s developed-market status.
The Kospi has become the world’s best-performing major equity benchmark this year, surging more than 90% as investors piled into artificial-intelligence winners. Yet the rally has also turned Korea into one of the world’s most volatile stock markets. The benchmark has repeatedly triggered exchange safeguards in recent days, while swings have surged to levels rarely seen among major global indexes.
Now investors are awaiting MSCI Inc.’s annual market-classification review on June 23, when the index provider will decide whether Korea finally earns a place on the watchlist for developed-market status, the first step toward an eventual upgrade.
Most of the 15 investors and strategists interviewed by Bloomberg expect MSCI to keep Korea in the emerging-market camp for now, arguing that recent reforms need more time to prove their durability. But few doubt the direction of travel.
“It’s more of a matter-of-time issue,” said Young Jae Lee, senior investment manager at Pictet Asset Management. “Korea will become a developed market at least in the next couple of years. That’s my base case.”
