MSCI Lifts Korea Short-Selling Score, Still Wary on Developed-Market Upgrade

Global index provider MSCI said South Korea has removed most obstacles to short selling, upgrading the country’s rating on that metric to “+” from “–” in its 2025 market-accessibility review. The change follows Seoul’s decision in March to fully lift a five-year blanket ban on the practice, a move long sought by foreign investors. Despite the improvement, MSCI signalled that South Korea is unlikely to win a near-term promotion from emerging- to developed-market status when the firm releases its annual classification update next week. It cited the absence of an offshore market for the won and continuing constraints in the onshore foreign-exchange market, along with broader issues around capital flows and market structure. An eventual upgrade could trigger sizeable index-tracking inflows, but analysts such as Hana Securities’ Lee Jae-man put the probability of South Korea even reaching MSCI’s watch list this year below 50%. The benchmark KOSPI has risen 24% in 2025, the strongest performance among major Asian equity gauges, on optimism over corporate-governance reforms and clearer policy direction.