SEOUL (Reuters) -The vice chief of South Korea’s financial regulatory agency said on Monday there is a high likelihood of the country’s stock market being included in a key developed market index in the near future.
“We see a very high possibility of being included soon, if not this time,” Kim So-young, vice chairman of the Financial Services Commission, said at a press conference held in Seoul for foreign media.
The stock market of Asia’s fourth-largest economy is currently categorised as an emerging market by global index provider Morgan Stanley Capital International (MSCI), despite many other metrics indicating its developed-economy status.
Last month, South Korea lifted a full market-wide ban on short selling of stocks for the first time in five years, which had been cited by foreign investors and MSCI as a major factor hindering market access.
“More than 90% (of the issues raised by MSCI) have been resolved,” Kim said. He added that Chairman Kim Byoung-hwan would discuss recent improvements with foreign investors and the index provider during his visit to the U.S. this week.
MSCI is scheduled to review its market classifications in June. Typically, the index provider places a market on a watch-list for a year or two before any reclassification.
The administration of former President Yoon Suk Yeol introduced various measures in recent years to improve market access for foreigners and address the so-called “Korea Discount”, which refers to the tendency for domestic stocks to be undervalued.
Regarding a recent revision to the Commercial Act aimed at resolving the “Korea Discount”, which was passed by parliament but vetoed, Kim said it was more desirable to amend the Capital Markets Act to minimise side effects.
Earlier on Monday, South Korea’s leading presidential candidate, Lee Jae-myung, pledged to revive legislation to curb abuses by controlling shareholders as part of a plan to bolster the stock market.
Kim said the authorities were also reviewing regulatory improvements concerning share issuance, following a series of controversial capital-raising plans, including that of Hanwha Aerospace, which faced investor criticism.
(Reporting by Jihoon Lee; Editing by Jacqueline Wong)
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