South Korea accounts for about 12% of the current emerging market benchmark. If it gets upgraded, it will be just 1 or 2% of the developed market benchmark. So that means a lot of smaller or medium-sized companies will see foreign investors selling their stocks. The big company, the biggest one in Samsung, is the biggest ones in Samsung's market index. Those companies will likely to see more foreign investors buying their stocks.
South Korea’s stock market is one of the largest in Asia. The nation is home to huge conglomerates including Samsung and Hyundai. And yet Korea is still listed as an emerging market — not a developed one — by MSCI, the investment research firm that provides influential market indexes. Korea argues it should be elevated to MSCI’s World Index, where it would sit alongside the US, UK, Germany and other developed economic powers. The company is expected to decide this month.
Bloomberg’s Youkyung Lee and Henry Ren join this episode to talk about why this move matters so much to South Korea — and why some companies and market watchers are having second thoughts about whether such a move is a good idea — or even worth it.
Read more: Why Bringing a $1.8 Trillion Stock Market to the Big Leagues Could Backfire
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