Global index provider FTSE Group (“FTSE”) announced today the results of its annual country classification review, the process by which stock markets are classified as either Developed or Emerging markets within the FTSE Global Equity Index Series. Although the FTSE Equity Index Committee has confirmed no changes to the designations of any country, it has added five markets to the Watch List, the first step in a change of designation status. Israel is added for a possible move to Developed status, Poland and Hungary are added for possible moves to Advanced Emerging status, Greece is added for possible move to Emerging status, while Pakistan is added for possible removal from FTSE Global Equity Index Series.
Three markets – South Korea, Taiwan and China “A” Shares are already on the Watch List from the 2005 review. The Committee noted continued improvements in these markets over the past year, but identified that further work remains to be done to meet fully the entry criteria for a status change, as set out in FTSE’s evaluation matrix, available on www.ftse.com/country.
The Watch List countries are now:
- South Korea - possible promotion to Developed from Advanced Emerging
- Taiwan - possible promotion to Developed from Advanced Emerging
- China “A” share - possible inclusion in FTSE Global Equity Index Series as Secondary Emerging
- Israel – possible promotion to Developed from Advanced Emerging
- Poland – possible promotion to Advanced Emerging from Secondary Emerging
- Hungary – possible promotion to Advanced Emerging from Secondary Emerging
- Greece – possible demotion to Advanced Emerging from Developed
- Pakistan – possible demotion from Secondary Emerging removal from FTSE Global Equity Index Series
All of these countries will be assessed again at the next country classification review in September 2007.
Countries remain on the Watch List for a minimum of twelve months before any change is made to their status. FTSE will give investors a minimum of six months notice prior to any changes being implemented in its indices as a result of a country classification review. Following today’s decision, investors now know that no changes to the classification of any countries will be implemented before March 2008 at the very earliest. Investors seeking to understand the possible impact of the changes suggested by the Watch List can use the FTSE Watch List Index Series, which is designed to reflect current market conditions, should changes to the markets outlined above be implemented.
For full details about FTSE’s country classification process and the current status of all countries in the FTSE Global Equity Index Series, please visit www.ftse.com/country. More information about the FTSE Watch List Series is available at www.ftse.com/watchlist.
