Msci Inc (NYSE:MSCI) has decided to reclassify the MSCI Greece Index from developed to emerging market status as a part of the November 2013 Semi-Annual Index Review.
MSCI Reasons For Reclassification
The MSCI Greece Index has not been able to meet various criteria of market accessibility. A developed market should meet the minimum standard of ongoing enhancement in the market, which is implemented by the authorities in various countries in the past few years. Market of Greece, however, has not undergone any such improvement in the previous years. As of now the situation is that the market in Greece is lacking on various fronts like securities borrowing and lending facilities, short selling and transferability.
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The investors and other participants of the market complained that the facilities like in kind transfer and off exchange transaction, which were introduced in 2008 by Greek authorities and the Athens Stock Exchange, are practically of no use because of the excessive limits.
The other drawbacks like no well established stock lending and short selling practices have done no good to the equity market of Greece. Additionally, the Greece Equity market has become more irreconcilable.
Russell Reclassified Greece earlier
Earlier in March of this year, Russell Investments reclassified the market of Greece from developed to an emerging market. The reason that made Russell investments take up this decision was “unfortunate economic tailspin” as said by the firm.
There were certain minimum standards set by the Russell Investments, which Greece failed to qualify. The standards were operational and macro risk tests that also incorporate per capita income, total market capitalization and the level of trading volume. These parameters are vital in knowing the economic health of the country. In 2001, Greece was categorized as a developed market, but it has been reclassified to an emerging market.
Other Announcement By MSCI
Msci Inc (NYSE:MSCI) is a leading provider of investment decision support tools globally, also announced to classify the MSCI Qatar and MSCI UAE Indices from Frontier Markets to Emerging Markets. MSCI Morocco Index has been reclassified from Emerging Markets to Frontier Markets. The company also plans to start a review on China A shares, for a possible inclusion in the MSCI Emerging Markets Index.
MSCI Korea and MSCI Taiwan indices will continue to be reviewed, for a potential reclassification to Developed Markets. The firm also revealed that it is keenly watching the developments in Egypt, primarily, the struggling foreign exchange market, and it may exclude the MSCI Egypt Index from the MSCI Emerging Markets Index, if the situation becomes worse in the coming months.