MSCI announces the results of the 2020 annual market classification review

On June 23, 2020, MSCI announced the inclusion of the MSCI Iceland Index in the MSCI Frontier Markets Index beginning June 2021. In addition, MSCI announced that it will consult on the potential reclassification of the MSCI Argentina Index as part of the MSCI 2021 Market Classification Review.

As a reminder, MSCI will implement the reclassification of the MSCI Kuwait Indexes from Frontier Markets status to Emerging Markets status in one step coinciding with the November 2020 Semi-Annual Index Review (SAIR).

Results of the MSCI 2020 global market accessibility review

On June 17, 2020, MSCI announced the results of the 2020 Global Market Accessibility Review, including the detailed report covering market accessibility assessments for 84 markets.

Following the announcement of the 2020 Annual Market Classification Review the detailed report of the MSCI 2020 Global market Accessibility Review originally released on June 17, 2020, now includes the assessment on Argentina, Iceland and Nigeria, thereby covering 84 markets.

The results of the MSCI Global Market Accessibility Review are announced prior to the communication of the MSCI Annual Market Classification Review in June of each year.

The table below reflects the currently effective classification of markets. Please refer to the latest Annual Market Classification Review and press release for details.

1 The MSCI Standalone Market Indexes are not included in the MSCI Emerging Markets Index or MSCI Frontier Markets Index. However, these indexes use either the Emerging Markets or the Frontier Markets methodological criteria concerning size and liquidity.

2 The West African Economic and Monetary Union (WAEMU) consists of the following countries: Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo. Currently the MSCI WAEMU Indexes include securities classified in Senegal, Ivory Coast and Burkina Faso.

Why a country's market classification may matter to investors

Every June, MSCI announces the results of its evaluation of the equity markets for countries around the world, to determine each country’s classification as a developed, emerging, frontier or standalone market. An important component of MSCI’s decisions is investors’ experience of market accessibility, rather than merely an abstract analysis of regulatory language. MSCI is careful not to force a decision that may take market participants by surprise.

The Annual Market Classification Review is designed to ensure that MSCI indexes remain relevant and precise investment decision support tools for clients, and continue to accurately represent the equity markets they are measuring.

For example: market accessibility can be overlooked, such that a country with an advanced economy and several world class companies may not necessarily equate to a sufficiently advanced market, when objectively compared to other markets (a frequent misconception).

The MSCI market classification framework

The Annual Market Classification Review is based on the MSCI Market Classification Framework , which aims to reflect the views and practices of the international investment community by striking a balance between a country’s economic development and the accessibility of its market while preserving index stability. The framework consists of the following criteria:

Economic development: Considers the sustainability of economic development and is only used in determining the classification of developed markets, given the wide range of development levels within emerging and frontier markets

Considers the sustainability of economic development and is only used in determining the classification of developed markets, given the wide range of development levels within emerging and frontier markets Size and liquidity requirements: Determines those securities that meet the minimum investability requirements of the MSCI Global Standard Indexes

Determines those securities that meet the minimum investability requirements of the MSCI Global Standard Indexes Market accessibility criteria: Aims to reflect international institutional investors’ experiences of investing in a given market and includes five criteria: openness to foreign ownership, ease of capital inflows / outflows, efficiency of operational framework, availability of investment instruments and stability of the institutional framework

June 2020 MSCI Global Market Accessibility Review Report

June 2020 MSCI Market Accessibility Country Comparison Report

As part of the annual market classification announcement, MSCI communicates the list of countries currently under review and the new list of countries, if any, under review for potential market reclassification in the upcoming cycle.



Past market reclassifications:

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Country Indexes Market Reclassification Date* MSCI Saudi Arabia From Standalone to Emerging Markets May 2019 MSCI Argentina Index From Frontier Markets to Emerging Markets May 2019 MSCI China Index China-A Shares included in the Emerging Markets May 2018 MSCI Pakistan Index From Frontier Markets to Emerging Markets May 2017 MSCI WAEMU Index From Standalone to Frontier Markets November 2016 MSCI Bulgaria Index From Frontier Markets to Standalone August 2016 MSCI Ukraine Index From Frontier Markets to Standalone August 2015 MSCI Qatar Index From Frontier to Emerging Markets May 2014 MSCI UAE Index From Frontier to Emerging Markets May 2014 MSCI Greece Index From Developed to Emerging Markets November 2013 MSCI Morocco Index From Emerging to Frontier Markets November 2013 MSCI Trinidad & Tobago Index** From Frontier Markets to Standalone May 2011 MSCI Israel Index From Emerging to Developed Markets May 2010 MSCI Bangladesh Index From Standalone to Frontier Markets May 2010 MSCI Argentina Index From Emerging to Frontier Markets May 2009 MSCI Pakistan Index*** From Standalone to Frontier Markets May 2009 MSCI Jordan Index From Emerging to Frontier Markets November 2008 MSCI Lithuania Index From Standalone to Frontier Markets November 2008 MSCI Serbia Index From Standalone to Frontier Markets November 2008 MSCI Sri Lanka**** From Standalone to Frontier Markets November 2007 MSCI Venezuela Index***** From Emerging to Standalone May 2006 MSCI Greece Index From Emerging to Developed Markets May 2001 MSCI Portugal Index From Emerging to Developed Markets November 1997

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