MSCI keeps Korea off developed market watchlist, but global analysts stay bullish

MSCI's decision to keep Korea off its watchlist for potential inclusion in the Developed Market Index has pushed back expectations for index-driven inflows, but analysts say the setback does little to weaken investors' constructive view of the country's stock market, which remains underpinned by artificial intelligence (AI)-related momentum. Wee Khoon Chong, APAC macro strategist at BNY, noted that the Korean stock market is in a favorable position thanks to AI-related growth momentum, even without inclusion in the Developed Market Index. "Inclusion in the MSCI Developed Market Index would be welcomed, bringing additional passive inflows, but a status quo MSCI decision would not change investors' constructive investment thesis on South Korea," he added. Korea was not added to MSCI's Developed Market Index watchlist in its 2026 market classification review, announced Wednesday. MSCI noted that underlying issues raised by global investors "have not been fully resolved." Korea was first included in the Emerging Markets Index in 1992 and was placed on MSCI's watchlist for potential inclusion