South Korea's push to shed its "Korea discount" reputation cleared another milestone on July 6, 2026, when authorities launched round-the-clock trading in the dollar-won spot market, the latest step in a government roadmap aimed at persuading index provider MSCI to reclassify the country from Emerging Markets to Developed Markets status. The move came weeks after MSCI's June 2026 review kept South Korea in its Emerging Markets index, with the index provider citing limited won convertibility offshore, a rigid investor-registration system, and restrictions on in-kind transfers and off-exchange transactions as unresolved barriers.
The January 2026 roadmap targets six areas MSCI has flagged as insufficient, including foreign-exchange liberalization, investor registration, clearing and settlement, and the availability of investment products tied to exchange data. Seoul had hoped the reforms would earn a spot on MSCI's developed-market watchlist at the June review; that did not happen, and officials now view a formal reclassification decision as realistic only by June 2027, with actual index inclusion not effective until 2028 at the earliest.
A borrowed playbook from Tokyo
The Financial Services Commission launched the underlying Corporate Value-up Program in February 2024, asking listed companies to voluntarily disclose plans for improving capital efficiency and shareholder returns — a template drawn directly from a March 2023 request by the Tokyo Stock Exchange that is widely credited with helping push the Nikkei 225 to a record high in February 2024. The Korea Exchange began tracking participants through its own KOSPI Value-Up Index in September 2024, and that index has since gained more than 130% in value. Lawmakers reinforced the program in 2025 by amending the Commercial Act to establish a clearer fiduciary duty from company directors toward all shareholders, not only controlling ones, and in February 2026 they went further, amending tax law so that high-dividend companies must publish a Value-Up disclosure plan to keep existing tax benefits.
Even so, South Korea's inheritance tax remains a structural headwind the Value-up Program was never designed to fix. The base rate tops out at 50% on estates above roughly 3 billion won, and a premium applied to controlling shareholders can push the effective rate on inherited company stakes above 60%. Samsung's Lee family faced this directly after chairman Lee Kun-hee's death in 2020, when heirs were left with a tax bill estimated near $9.3 billion — a liability large enough that some controlling families have historically had limited incentive to see their own share price climb.
Discount, but a bigger discount
South Korea's market has grown regardless of its classification: the country recently surpassed the United Kingdom to become the world's eighth-largest stock market, and its 23% weighting in the MSCI Emerging Markets Index now exceeds China's 19%. Korean equities still trade at a forward price-to-earnings ratio of around 6, a discount to most regional peers that suggests investors have yet to fully price in three years of governance reform.