MSCI Keeps South Korea in Emerging Markets Despite 112% KOSPI Rally
MSCI•South Korea's KOSPI soared 112% in 2026 to overtake the FTSE 100 as the top-performing major index, yet MSCI held its Emerging Markets designation due to won trading hours limits and investor ID rules. Planned 24-hour dollar-won trading from July 6 must prove sufficient liquidity and narrow spreads.
1. Strong Index Rally
South Korea's KOSPI index surged 112% in 2026 and overtook the FTSE 100 to become the world's top-performing major equity index. This rally was driven by technology giants like Samsung and SK Hynix, pushing market capitalization to the eighth-largest globally.
2. MSCI Classification Criteria
Despite this performance, MSCI retained South Korea in its Emerging Markets category, citing limitations in the won's trading hours and stringent investor identification and in-kind transfer requirements. MSCI emphasized that global fund managers cannot trade won outside Seoul business hours, hindering efficient portfolio rebalancing.
3. Upcoming Trading Reform
The South Korean government plans to launch 24-hour dollar-won spot trading on July 6, aiming to address liquidity gaps in off-hours sessions. MSCI will evaluate whether this reform delivers sufficient trading depth and tight bid-ask spreads before its next annual review.
