Market Overview

ETFs For MSCI's Dud Of A Reclassification


Well, MSCI's (NYSE: MSCI) market reclassification came and went with no earth-shattering changes from the index provider as South Korea and Taiwan retained their emerging markets status, but are still on review for a possible promotion to developed market status when the 2012 reclassification rolls around.

In the near-term that could be good news for the iShares MSCI South Korea Index Fund (NYSE: EWY) and the iShares MSCI Taiwan Index Fund (NYSE: EWT) because the prestige of the developed markets badge isn't all it's cracked up to be.

The IQ Taiwan Small Cap ETF (NYSE: TWON) and the IQ South Korea Small Cap ETF (NYSE: SKOR) may also benefit from still being considered emerging markets ETFs.

Another one to watch could be the Market Vectors Gulf States ETF (NYSE: MES) because Qatar and the United Arab Emirates were left in the not-for-the-faint-of-heart frontier markets category, but remain on review for a possible boost to emerging markets status next year. Those two countries account for almost 48% of the country allocation in MES.

The earliest Qatar and UAE could be reclassified is November 2012, according to a statement issued by MSCI.

A stretch play may be the Market Vectors Egypt ETF (NYSE: EGPT) because MSCI said it is not reviewing the eligibility of the MSCI Egypt Index in the MSCI Emerging Market Index, though it should be noted EGPT does not track the MSCI Egypt Index.

MSCI will not include the MSCI Pakistan Index in the review list for potential reclassification to Emerging Markets as part of the 2012 Annual Market Classification Review because only three index members would meet the MSCI Emerging Markets Index size requirement, the firm said in the statement.

Global X filed plans for a Pakistan-specific ETF last year, but the fund has not yet come to market.

Posted-In: Long Ideas News Short Ideas New ETFs Small Cap Analysis Emerging Market ETFs Events Global


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