Kim So-young, Vice Chairman of the Financial Services Commission, expressed expectations regarding the inclusion of the country in the Morgan Stanley Capital International (MSCI) developed market index watchlist on the 21st.
During a briefing for foreign journalists at the government complex in Seoul, Vice Chairman Kim responded to a question about the possibility of being listed as an MSCI developed market index watchlist country by saying, "I think the possibility of entering soon, even if not this time, is very high."
The MSCI index categorizes global indices into developed, emerging, and frontier markets based on criteria such as economic scale and openness. South Korea remained in the emerging market category last June. It noted that "the restriction of market accessibility due to the short-selling ban policy that started in October 2023 is a focal point."
The commencement of short selling in the domestic market on the 31st of last month has resolved such risks. Even if it is listed as a watchlist country in June, the official inclusion will be decided in June of next year. To be included in the MSCI developed market index, a country must remain on the watchlist for over a year.
Vice Chairman Kim explained, "We have received materials regarding insufficient aspects related to the inclusion and have made efforts to improve them, most of which have already been completed," adding that "over 90% of the parts identified as 'insufficient aspects' related to the inclusion in the developed market index have already been resolved."
The Financial Services Commission has suspended short selling and established a 'Short Selling Central Monitoring System (NSDS)' to eradicate naked short selling. This system is the world's first to check and block illegal short selling in real-time.
Vice Chairman Kim stated that "immediately after short selling resumed, trading was quite active but gradually decreased, and last week, the trading volume ratio fell below 4%" and predicted that "short selling will gradually stabilize and return to normal levels soon."
Regarding the failure to pass the amendment to the Commercial Act after the government's veto, he said, "The government's position is to first consider amending the Capital Markets Act due to several side effects and uncertainties."
However, Vice Chairman Kim remarked that "the amendments to the Commercial Act and the Capital Markets Act are not about one being approved and the other not; rather, how to manage the details is a very important issue."
Regarding the capital market advancement policy, which was a key initiative of the previous administration, he explained, "There have already been significant advancements over the past three years in implementing the capital market advancement policy, so at least this aspect is something that cannot be reversed."
Regarding Hanwha Aerospace's controversial capital increase, he stated that if necessary, they would improve the system.
Vice Chairman Kim noted, "There has been no decision made yet," but added that he would review whether there are aspects related to protecting general shareholders.