FTSE Group has completed its Annual Country Classification Review, whereby it decides which countries get Developed, Advanced Emerging, Secondary Emerging or Frontier market status on its indices.
FTSE decided not to reclassify any countries but has reassessed its Watch List of countries being considered for promotion or demotion.
Argentina has been added to the list as a possibility for removal from the Frontier classification, while Mongolia may be added to the Frontier category.
Argentina was added to the Watch List due to stringent capital controls in the country being imposed on international investors, along with a perceived lack of independent regulatory authority to protect shareholders, FTSE says.
Mongolia, on the other hand, may be promoted due to infrastructural development, which has attracted foreign investors through improvements in its trading, settlement and custody arrangements.
For more on Mongolias continuing market developments, see For want of custody, Global Custodian, Spring 2012.
The following other markets remain on the Watch List:
– China A Share Possible inclusion as Secondary Emerging- Greece Possible demotion to Advance Emerging- Kazakhstan Possible inclusion in Frontier- Kuwait Possible inclusion as Secondary Emerging- Poland Possible promotion from Advanced Emerging to Developed- Taiwan Possible promotion from Advanced Emerging to Developed- Ukraine Possible inclusion in Frontier
Markets are evaluated based on 21 quality of markets criteria, which have been developed by FTSE, institutional investors and domestic market authorities.
The FTSE All-World Index Series includes 47 countries, comprising 25 Developed, 10 Advanced Emerging and 12 Secondary Emerging countries. The FTSE Frontier 50 Index comprises 26 other countries classified at Frontier markets.
(CG)