FTSE Group Praises Investment Reforms Made In Taiwan And South Korea

by Mary Swire, for LawAndTax-News.com, Hong Kong

15 September 2005

Global index provider FTSE Group announced on Wednesday that no changes will be made to its current country classifications in 2006 (i.e. whether stock markets are classified as either Developed or Emerging markets within the FTSE Global Equity Series).

This decision was taken by the FTSE Equity Index Committee, and was based on the results of an ongoing engagement programme between FTSE Group and stock exchanges around the world, including a close examination of market structures.

Although FTSE's analysis showed that no countries currently meet the criteria to be moved to a new category or to join the FTSE Global Equity Index Series for the first time, the Committee noted the substantial progress that has been made to improve the investment environment in a large number of countries.

In particular, the Committee applauded the improvements made by South Korea and Taiwan. Both countries are presently on the Watch List of countries that have been closely monitored over the last twelve months for possible promotion to Developed status.

However, to be recognised as Developed markets, the Committee concluded that Taiwan has not yet made sufficient progress in:

• Ensuring a free and well-developed foreign exchange market;
• Simplifying its registration process for foreign investors; and
• Further improving the process for off-exchange transactions.

The FTSE Group went on to state that South Korea too, needs to improve its market's conditions, focusing on:

• Improving the conditions for off-exchange transactions;
• Making further progress in ensuring a free and well-developed foreign exchange market; and
• Allowing the easy use of omnibus account facilities by international investors.

The Committee concluded that China "A" shares, the third market on the Watch List, had not yet met all of the criteria required to be classified as an emerging market and be included in the FTSE Global Equity Index Series. The Committee also encouraged Greece to continue its ongoing progress of improving the investment conditions to bring its market onto a par with other Developed markets in Europe.

David Hobbs, Chairman of the FTSE Equity Committee, announced that:

"The Committee has been impressed with the progress that has been made in certain countries to improve market conditions for international investors. In particular, South Korea and Taiwan need to be commended for their tremendous enthusiasm in encouraging change in their markets and for seeking an active dialogue with investors worldwide."

"We look forward to further constructive discussions with these and other markets and will continue to monitor their progress with interest."

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