MSCI has noted improved accessibility for short-selling in South Korea’s stock market, raising hopes that the country could soon be added to the global index provider’s watchlist for a potential upgrade to developed market status. In its annual market accessibility review released Friday, MSCI upgraded South Korea’s short-selling rating to “+”, indicating no major issues but room for further improvements. This marks a notable shift from its previous “–” rating, which signaled the need for significant changes.
South Korea, currently classified as an emerging market by MSCI, has long pursued developed market recognition. The country took a major step in March by fully lifting its short-selling ban for the first time in five years, a move aimed at addressing one of the key concerns of foreign investors and MSCI.
Despite this progress, analysts remain cautious. Lee Jae-man of Hana Securities highlighted that South Korea still scores poorly in several subcategories compared to developed peers. As a result, the probability of being placed on MSCI’s observation list for reclassification in 2025 is considered less than 50%.
Still, investor sentiment has been strong. The benchmark KOSPI index has surged 24% year-to-date, making it the top-performing Asian stock market in 2025, driven by political stability and hopes for corporate reform.
Elsewhere, MSCI stated that Argentina has eased some capital flow restrictions but still falls short of emerging market criteria, remaining classified as a Standalone Market. Bulgaria’s status update is expected on June 24, with speculation it may be reclassified to Frontier Market status.
A potential MSCI upgrade for South Korea could bring substantial foreign capital inflows, but full alignment with developed market standards remains a work in progress.


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