Forex Stability First
MSCI announced on June 15 that it did not include South Korea in its watch list for this year. Any country can join the MSCI World Index after putting its name on the list in advance.
According to MSCI, South Korea failed to join the watch list this year in that measures proposed by the Financial Services Commission (FSC) to that end are unlikely to become effective until next year, restrictions on investment attributable to the lack of exchangeability of the Korean currency are still remaining and the use of data of the Korea Exchange on financial product development is still limited.
If South Korea had been included in the watch list at this time, its incorporation into the MSCI World Index would have been examined in June next year and actual incorporation would have been carried out in or after 2018. At present, South Korea is being regarded as an advanced economy in the indices of the IMF, FTSE, S&P and Dow Jones.
“It seems that more time will be required for South Korea to join the MSCI World Index,” said FSC vice chairman Jeong Eun-bo, continuing to say that the South Korean government will keep trying, in spite of the result, for the advancement of the domestic financial market and improvement of the attraction of South Korean enterprises as investment destinations.
He also mentioned that the government expressed its unwillingness to allow offshore won trading, one of MSCI’s main requests. “Forex stability is an important matter for South Korea in that it is a small and open economy depending heavily on exports and imports,” he said, adding, “Offshore won trading, which can cause a fundamental change in the country’s forex management systems, is unlikely to be allowed in the near future