MSCI Inc. (MSCI) has added Greece to its review list for
potential reclassification as an emerging market and said Taiwan
and South Korea will remain on review for an upgrade to
developed-market status, according to the results of the financial
index provider's annual market classification review.
MSCI said Greece no longer meets the size standards for a
developed market since it only has two eligible index constituents.
MSCI added that Greek authorities have failed over the last several
years to bring equity-market regulations and practices in line with
its standards for a developed market. The firm said its decision is
based on the structural analysis of Greece's equity market and
isn't related to its potential exit from the euro area.
MSCI's market-classification framework is based on a country's
economic development, market size and liquidity, and market
accessibility.
Additionally, MSCI said the statuses of Korea, Taiwan, Qatar and
the United Arab Emirates remain unchanged.
Both South Korea and Taiwan, which currently have
emerging-market status, have been candidates for an upgrade for the
last four years. The issue has generated a lot of interest in
previous years due to potential shifts in fund flows, but analysts
say the classification by MSCI has diminishing importance in
deciding fund allocations today.
Qatar and UAE will remain under review for a potential
reclassification to emerging markets.
MSCI said Morocco will be added to its review list for a
possible reclassification as a frontier market, noting that
liquidity levels in the Moroccan equity market have declined
substantially in recent years.
MSCI said despite positive developments on the provision of
stock-market data, limitations in currency trading and equity
settlement across multiple accounts remain unchanged in Korea.
MSCI added that Taiwan meets many developed-market criteria, but
said market accessibility issues related to currency trading and
equity-market settlement prevent it from an upgrade.
MSCI provides stock indexes, portfolio risk evaluation and
performance data to mostly institutional investors.
Write to Nathalie Tadena at nathalie.tadena@dowjones.com