By Tim Seymour
Despite the market’s eagerness, MSCI did not reclassify any countries along the “frontier” to “developed” axis yesterday — and future changes may be hard to come by.
There was a lot of speculation yesterday that South Korea would finally move out of the emerging markets category, absorbing some weighting in the developed EFA index from Japan in the process. Of course, we have been hearing about this as a vague possibility for over a decade now, and it has never quite materialized. Maybe when and if the Koreas unite, or -- more likely -- when Seoul allows the won to float freely against other currencies.
Traders were also hoping that Taiwan was getting promoted up to EFA, but it did not happen, again due to currency convertibility concerns.
As for the frontier markets, speculation that Qatar and the United Arab Emirates would be moving up to the emerging index EEM was also disappointed.
From here, these are the only four countries still slated for ongoing review over the next two years. MSCI promises that they will give the markets a year of lead time on any changes that actually happen.