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MSCI: No Big Changes In This Emerging Markets ETF (EFA, EWY, EWT, EEM)

June 22nd, 2011
Tim Seymour:  Despite the market’s eagerness, MSCI did not reclassify any countries along the “frontier” to “developed” axis yesterday — and future changes may be hard to come by.

There was a lot of speculation yesterday that South Korea would finally move out of the emerging markets category, absorbing some weighting in the developed the iShares MSCI EAFE Index ETF (NYSE:EFA) from Japan in the process.

Of course, we have been hearing about this as a vague possibility for over a decade now, and it has never quite materialized. Maybe when and if the Koreas unite or, more likely, when Seoul allows the won to float freely against other currencies.

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Meanwhile, the large-cap South Korea ETF (NYSE:EWY) is up a bit today while the Taiwanese equivalent (NYSE:EWT)  is down:

Traders were also hoping that Taiwan was getting promoted up to EFA, but it did not happen, again due to currency convertibility concerns.

As for the frontier markets, speculation that Qatar and the United Arab Emirates would be moving up to the emerging index (NYSE:EEM) was also disappointed.

From here, these are the only four countries still slated for ongoing review over the next two years. MSCI promises that they will give the markets a year of lead time on any changes that actually happen.

Written By Tim Seymour From Emerging Money

Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.

About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.


NYSE:EEM, NYSE:EFA, NYSE:EWT, NYSE:EWY


 

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