South Korea is bolstering its case for developed-market status in MSCI indexes due to corporate governance improvements and the end of a short-selling ban, according to Invesco and M&G Investments. Inclusion on MSCI's watch list later this month could lead to an upgrade in 2026, potentially drawing $30 billion in passive inflows, according to Goldman Sachs strategists.
South Korea's bid for an upgrade to developed-market status within MSCI Inc.'s indexes has gained significant traction, primarily due to concerted efforts to improve corporate governance standards and the termination of a controversial short-selling ban. This positive outlook is shared by money managers at Invesco Ltd. and M&G Investments, who anticipate South Korea's addition to MSCI's watch list during the upcoming reclassification decisions later this month. An inclusion on the watch list is a critical step towards a potential full upgrade, projected for 2026. Strategists at Goldman Sachs Group Inc. estimate that such an upgrade could trigger substantial passive investment inflows, potentially reaching $30 billion, which would likely have a considerable impact on market valuations and liquidity. The overall sentiment surrounding this development is strongly positive, indicating a high potential market impact stemming from these reforms and reclassification prospects.
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strongly positive
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