Woofun AI reports that MSCI has maintained South Korea's "Emerging Market" classification for the 15th consecutive year, despite market strength from AI chip leaders Samsung Electronics and SK Hynix. The decision stems from continued restrictions on foreign access and insufficient opening of the offshore Korean won market.

Regulators remain constrained by fears of repeating the 1997 Asian financial crisis, keeping foreign exchange controls tight and limiting won settlement to onshore transactions. While an upgrade could attract $30 billion in passive inflows, it would reduce South Korea's index weight from 24% to approximately 3%, potentially causing outflows from small and mid-cap stocks. Analysts emphasize that resolving the "Korea discount" requires structural reforms in tax policy and corporate governance rather than relying solely on classification changes.