Will Korea finally win MSCI developed market status?

The Morgan Stanley Capital International logo / Reuters-Yonhap

Korea's chances of joining Morgan Stanley Capital International's (MSCI) Developed Markets Index are back in focus as the benchmark KOSPI rallies toward the 9,000-point milestone, analysts said Wednesday.

MSCI is scheduled to release the results of its 2026 Global Market Accessibility Review on June 18, followed by the results of its Annual Market Classification Review on June 23.

Korea is seeking placement on MSCI's watch list in this year's classification review, a prerequisite for eventual reclassification as a developed market. Under MSCI's framework, markets typically remain on the watch list for at least one year before becoming eligible for an upgrade.

Government officials hope a watch list designation this year will pave the way for Korea's reclassification as a developed market in 2027.

The upcoming review is drawing particular attention as the Korean government has stepped up efforts to address long-standing issues that have repeatedly kept the country from being reclassified as a developed market.

In its 2025 review, MSCI retained Korea in its "emerging market" category, citing the limited convertibility of the won in offshore markets as one of the key barriers to an upgrade.

Earlier this year, the government unveiled a comprehensive foreign exchange and capital market reform roadmap aimed at improving market accessibility for global investors.

The measures include extending foreign exchange market trading hours, allowing offshore won settlement services and simplifying account opening procedures for foreign investors.

According to the Ministry of Finance and Economy, 25 of the 39 policy tasks outlined in the reform roadmap have been completed as of May.

A key reform is set to take effect in July, when Korea's foreign exchange market transitions to a virtually 24-hour trading system. The move is intended to improve access for overseas investors across different time zones and address one of the concerns repeatedly highlighted by MSCI.

Still, analysts remain cautious about the prospects of a near-term upgrade, noting that MSCI tends to focus on how reform measures work in practice rather than on the measures themselves.

Choi Ji-woon, a researcher at the Korea Capital Market Institute, said the index provider generally begins discussions on reclassification only after reforms have been fully implemented.

"There is limited time for the ongoing reforms to become fully established before the market classification review later this month. Further improvements are likely to be needed, particularly in ensuring full convertibility of the won and unrestricted access to investment products in the derivatives market," Choi said.