FTSE, the indexing company behind the $4.6 billion iShares FTSE
China 25 Index Fund (NYSEArca:FXI), concluded its 2012 index review
with no changes to its country classification, though it did put
Argentina on notice for possible future removal as a frontier
market under the FTSE system.
FTSE, which is probably most well known as the owner of the
benchmark for British stocks, also added Mongolia to its list of
countries in line for possible promotion to frontier market status,
saying in a press release that the east Asian country is developing
a market infrastructure that is attractive to foreign investors
through improvements to its trading, settlement and custody
policies.
For its part, Argentina is being singled out due to the South
American country's continuing stringent capital controls imposed on
international investors and a perceived lack of an independent
regulatory authority to protect the rights of shareholders. In
2010, FTSE demoted Argentina to frontier status from the indexing
firm's "Secondary Emerging" category.
Including Argentina and Mongolia, FTSE's "Watch List" for
potential changes to its family of indexes now includes seven
countries. The countries and the reasons they are on the list
are:
- 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
- Mongolia - Possible inclusion in Frontier
- Poland - Possible promotion from Advanced Emerging to
Developed
- Taiwan - Possible promotion from Advanced Emerging to
Developed
- Ukraine - Possible inclusion in Frontier
All these questions will be taken up a year at FTSE's next
annual classification in September 2013, the company said.
In a separate annual country classification review of its own
earlier this year MSCI made no changes, but kept South Korea
and Taiwan under review for possible reclassification to developed
markets from their current status as emerging markets.
MSCI also added debt-gorged Greece to its list of possible
reclassifications, saying the southern European country risked
being demoted to an emerging markets country from its current
developed-market status. MSCI also said that Morocco has been added
for potential consideration as a candidate for the MSCI Frontier
Markets Index.
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