FTSE Russell, a leading global index provider, has published the results of its March 2023 country classification review for equities and fixed income.
Fixed Income
FTSE Russell announces that South Korea will remain on the Watch List for a potential upgrade to Market Accessibility Level ‘2’ and for consideration for inclusion in the FTSE World Government Bond Index (WGBI). This follows announcements by the South Korean market authorities of several proposed initiatives intended to improve the market’s structure and the accessibility of South Korean capital markets. FTSE Russell will continue to gather feedback from market participants as the proposed reforms are implemented to assess the practical experiences of international investors against the requirements for a Market Accessibility Level upgrade.
India will be retained on the Watch List for a potential upgrade to Market Accessibility Level ‘1’ and for consideration for inclusion in the FTSE Emerging Markets Government Bond Index (EMGBI). FTSE Russell continues to engage with its index users and Indian market authorities regarding ongoing market structure reforms.
Switzerland will also remain on the Watch List for a potential upgrade to Market Accessibility Level ‘2’ and for consideration for inclusion in the WGBI.
The full FTSE Fixed Income Country Classification Announcement can be found here: Fixed Income – March 2023 Announcement.
Equity
Nigeria will remain on the Watch List for potential reclassification from Frontier to Unclassified market status. Investors continue to report significant, ongoing delays to the repatriation of capital from Nigeria, which began in 2020. FTSE Russell will provide an update on the status of Nigeria at the end of June 2023; in the interim, Nigeria’s rating against the repatriation of capital criterion has been downgraded from ‘Restricted’ to ‘Not Met’ within the FTSE Equity Country Classification Framework.
Vietnam remains on the Watch List for a possible reclassification to Secondary Emerging market status as the market has yet to meet the settlement requirements stipulated in the FTSE Equity Country Classification Framework. The market continues to pursue various regulatory reforms and an upgrade to the main trading platform, which FTSE Russell continues to monitor.
FTSE Russell also continues to engage with certain Frontier markets which have faced a deterioration of foreign exchange (FX) availability and intends to provide an update on the status of markets including Bangladesh, Ghana, and Kenya as part of the September 2023 annual review of markets, as required.
The full FTSE Equity Country Classification Announcement can be found here: Equity – March 2023 Announcement.
David Sol, Global Head of Index Policy at FTSE Russell, comments:
“At the heart of FTSE Russell’s approach to the classification of equity and fixed income markets is the ongoing monitoring of the accessibility and economic realities of global markets. Through our proactive programme of engagement and market analysis, FTSE Russell equity and fixed income indices remain fit for purpose and reflect both the opportunities and challenges faced by investors. Our March 2023 interim update is transparent and informative, simultaneously defining the status quo and the path forward for the evolution of our indices and associated frameworks”.
More information on the Equity Country Classification framework and the Fixed Income Country Classification framework can be found on our website. The next update will be published in September 2023.
