Korea’s MSCI developed market roadmap appears solid; success depends on
1) execution 2) incorporating investor feedback and 3) winning trust from international investors via investor protection
The roadmap including action plans is lauded as a near-perfect
Inclusion in the MSCI DM index may help stability in the Korean won
Korea must undergo a fundamental paradigm shift to be perceived by the global community as a trustworthy market where investor protection is a fundamental right
KRX, FSC, FSS, and the Ministry of Justice must dramatically improve the quality and depth of their English-language disclosures
The current notice period for AGM and voting exercise period is excessively short for global institutions
MSCI would not make decision by itself: the collective perception of global investment community that Korea has achieved a genuine, structural transformation is crucial
KRX and regulators are urged to benchmark Japan for continuous feedback mechanism
The 'Comprehensive Roadmap for MSCI Developed Market Inclusion' announced by the Korean government on January 9th was highly impressive, offering a granular and comprehensive set of initiatives across eight key areas of reform. If graded, the plan is nearly a perfect 'A+' in our opinion. The roadmap has also been integrated as a core pillar of the 2026 National Growth Strategy (announced on the same day), which encompasses 4 strategic fields, 15 major tasks, and 50 detailed sub-tasks. Notably, the government plans to address long-standing market accessibility concerns by mandating 24-hour FX market and streamlining investor registration and account opening.
Inclusion in the MSCI Developed Market (DM) Index is expected to yield the secondary benefit of exchange rate stability. This transition will significantly diminish the current trend where both share prices and Korean won are disproportionately swayed by the short-term net buying or selling of foreign investors. Ultimately, MSCI DM inclusion will serve as the catalyst for the government's 'Roadmap for Korean Won Internationalization,' another 50 sub-tasks.
The establishment of a quarterly action monitoring system, spearheaded by the first Vice Minister of Economy and Finance Lee, is a step toward enhancing transparency and ensuring policy momentum.
However, as the reform process remains at a halfway point, we propose four essential measures to complete the transition to a premium market.
1. The legacy of unfulfilled promises by the government and chaebols regarding the reform has created a staggering credibility gap over the past two to three decades. Arbitrary pivots on the Commercial Act revision and the abrupt suspension of short selling under the previous Yoon regime have only exacerbated the Korea discount. Despite recent legislative strides in corporate governance since July 2025, global investors remain guarded, waiting for consistent execution rather than just rhetoric.
Investor protection is the bedrock of the 'Favorable Investment Environment' outlined in the Roadmap. While FX and capital market reforms are welcome, they are secondary to the restoration of investor trust. The government must accelerate the 3rd Commercial Act amendment and upcoming Capital Markets Act reforms. The goal is to fundamentally redefine Korea’s global standing as a jurisdiction where investor protection is guaranteed.
2. The quality of English-language disclosure remains a significant barrier to entry, lagging far behind regional peers like Japan and Taiwan. The Korea Exchange (KRX) must take a "carrot and stick" approach to enforcement for listed companies. Mandatory English disclosure thresholds (Phase 3) for KOSDAQ firms must be based on market capitalization, not total assets of above W2 trillion. In a growth-oriented ecosystem, asset size is a legacy metric with little relevance. In our view, the government and the Fair Trade Commission (FTC) must pivot their "Large Business Group" rankings to be market cap-based (rather than the current total asset size-based). Crucially, these rankings must exclude double-counting from parent-subsidiary listings. The current practice of simple aggregation incentivizes value-destructive dual-listings. A rationale for proper calculation is needed to discourage the Korea discount caused by complex holding structures.
While the relevant ministries (FSC, FSS, MOJ) and KRX have improved their English reporting, the current output remains insufficient for global standards. To bridge the gap, the government must move beyond incremental updates and deliver a paradigm shift in English disclosure.
3. Global investors place paramount importance on voting rights. Historically, the Korean market has from time to time suffered 'vote leakage' (unaccounted votes) during the proxy voting process. A comprehensive overhaul of the voting system, particularly votes exercised by international investors is essential. Furthermore, the infrastructure must be urgently upgraded to support cumulative voting.
Korea must also address the unreasonably short 14-day notice period for AGM and the current KSD (Korea Securities Depository) requirement for foreign investors to cast votes five business days prior to the meeting. These constraints severely impede the ability of international investors to conduct a meaningful, in-depth review of resolutions.
4. As outlined in the Roadmap, the emphasis on communication with international investors is a step in the right direction. However, the government must remember that MSCI DM index inclusion is not a unilateral decision by MSCI; the core requirement is a fundamental shift in the perception of the global investors toward Korea. Government officials should move beyond generic group meetings. It is vital to conduct 1-1 meetings at the headquarters of these investors in New York, Boston, Los Angeles, London, Singapore, and Hong Kong etc.
Furthermore, senior leadership from the FSC, FSS, KRX, and the Ministry of Justice must adopt an open posture, establishing a permanent feedback loop to consistently listen to international investors. Korean regulators and the Exchange should look to the Japanese model as a benchmark for building such a robust, continuous engagement mechanism.
January 13th, 2026
The Korean Corporate Governance Forum,
Chairman, Namuh Rhee
KCGF Opinion_ Korea’s MSCI developed market roadmap appears solid; success depends on 1) execution 2) incorporating investor feedback and 3) winning trust from international investors via investor protection
Korea’s MSCI developed market roadmap appears solid; success depends on
1) execution 2) incorporating investor feedback and 3) winning trust from international investors via investor protection
The roadmap including action plans is lauded as a near-perfect
Inclusion in the MSCI DM index may help stability in the Korean won
Korea must undergo a fundamental paradigm shift to be perceived by the global community as a trustworthy market where investor protection is a fundamental right
KRX, FSC, FSS, and the Ministry of Justice must dramatically improve the quality and depth of their English-language disclosures
The current notice period for AGM and voting exercise period is excessively short for global institutions
MSCI would not make decision by itself: the collective perception of global investment community that Korea has achieved a genuine, structural transformation is crucial
KRX and regulators are urged to benchmark Japan for continuous feedback mechanism
The 'Comprehensive Roadmap for MSCI Developed Market Inclusion' announced by the Korean government on January 9th was highly impressive, offering a granular and comprehensive set of initiatives across eight key areas of reform. If graded, the plan is nearly a perfect 'A+' in our opinion. The roadmap has also been integrated as a core pillar of the 2026 National Growth Strategy (announced on the same day), which encompasses 4 strategic fields, 15 major tasks, and 50 detailed sub-tasks. Notably, the government plans to address long-standing market accessibility concerns by mandating 24-hour FX market and streamlining investor registration and account opening.
Inclusion in the MSCI Developed Market (DM) Index is expected to yield the secondary benefit of exchange rate stability. This transition will significantly diminish the current trend where both share prices and Korean won are disproportionately swayed by the short-term net buying or selling of foreign investors. Ultimately, MSCI DM inclusion will serve as the catalyst for the government's 'Roadmap for Korean Won Internationalization,' another 50 sub-tasks.
The establishment of a quarterly action monitoring system, spearheaded by the first Vice Minister of Economy and Finance Lee, is a step toward enhancing transparency and ensuring policy momentum.
However, as the reform process remains at a halfway point, we propose four essential measures to complete the transition to a premium market.
1. The legacy of unfulfilled promises by the government and chaebols regarding the reform has created a staggering credibility gap over the past two to three decades. Arbitrary pivots on the Commercial Act revision and the abrupt suspension of short selling under the previous Yoon regime have only exacerbated the Korea discount. Despite recent legislative strides in corporate governance since July 2025, global investors remain guarded, waiting for consistent execution rather than just rhetoric.
Investor protection is the bedrock of the 'Favorable Investment Environment' outlined in the Roadmap. While FX and capital market reforms are welcome, they are secondary to the restoration of investor trust. The government must accelerate the 3rd Commercial Act amendment and upcoming Capital Markets Act reforms. The goal is to fundamentally redefine Korea’s global standing as a jurisdiction where investor protection is guaranteed.
2. The quality of English-language disclosure remains a significant barrier to entry, lagging far behind regional peers like Japan and Taiwan. The Korea Exchange (KRX) must take a "carrot and stick" approach to enforcement for listed companies. Mandatory English disclosure thresholds (Phase 3) for KOSDAQ firms must be based on market capitalization, not total assets of above W2 trillion. In a growth-oriented ecosystem, asset size is a legacy metric with little relevance. In our view, the government and the Fair Trade Commission (FTC) must pivot their "Large Business Group" rankings to be market cap-based (rather than the current total asset size-based). Crucially, these rankings must exclude double-counting from parent-subsidiary listings. The current practice of simple aggregation incentivizes value-destructive dual-listings. A rationale for proper calculation is needed to discourage the Korea discount caused by complex holding structures.
While the relevant ministries (FSC, FSS, MOJ) and KRX have improved their English reporting, the current output remains insufficient for global standards. To bridge the gap, the government must move beyond incremental updates and deliver a paradigm shift in English disclosure.
3. Global investors place paramount importance on voting rights. Historically, the Korean market has from time to time suffered 'vote leakage' (unaccounted votes) during the proxy voting process. A comprehensive overhaul of the voting system, particularly votes exercised by international investors is essential. Furthermore, the infrastructure must be urgently upgraded to support cumulative voting.
Korea must also address the unreasonably short 14-day notice period for AGM and the current KSD (Korea Securities Depository) requirement for foreign investors to cast votes five business days prior to the meeting. These constraints severely impede the ability of international investors to conduct a meaningful, in-depth review of resolutions.
4. As outlined in the Roadmap, the emphasis on communication with international investors is a step in the right direction. However, the government must remember that MSCI DM index inclusion is not a unilateral decision by MSCI; the core requirement is a fundamental shift in the perception of the global investors toward Korea. Government officials should move beyond generic group meetings. It is vital to conduct 1-1 meetings at the headquarters of these investors in New York, Boston, Los Angeles, London, Singapore, and Hong Kong etc.
Furthermore, senior leadership from the FSC, FSS, KRX, and the Ministry of Justice must adopt an open posture, establishing a permanent feedback loop to consistently listen to international investors. Korean regulators and the Exchange should look to the Japanese model as a benchmark for building such a robust, continuous engagement mechanism.
January 13th, 2026
The Korean Corporate Governance Forum,
Chairman, Namuh Rhee
KCGF Opinion_ Korea’s MSCI developed market roadmap appears solid; success depends on 1) execution 2) incorporating investor feedback and 3) winning trust from international investors via investor protection