For years, Seoul has attempted to shed its emerging-market label by streamlining settlement systems and mandating English-language disclosures. While FTSE Russell elevated Korea to developed status in 2009, MSCI remains unconvinced. The primary friction point is the won; because it is not deliverable offshore, global investors face restricted access and thin liquidity during non-standard trading hours.

MSCI acknowledged the government's efforts to extend forex trading, but investors reported that these reforms have yet to translate into the deep, consistent liquidity pools expected of developed financial hubs. Christy Tan of the Franklin Templeton Institute notes that this decision reinforces the "Korea discount," a structural valuation ceiling that leaves the Kospi lagging behind the Nasdaq and Japan’s Nikkei. Until onshore liquidity can support the tight bid-ask spreads and execution standards of global peers, the nation’s path to reclassification remains blocked.