This year’s annual FTSE Country Classification Review has been completed by the independent FTSE Country Classification Committee, and their recommended changes have been ratified by the FTSE Policy Group. As a result of the review all country classifications remain unchanged. Two countries – Argentina and Mongolia – have been added to the Watch List for further assessment in the next annual review.
FTSE reviews the market status of all countries included in its global benchmarks annually and assigns each country to a category – Developed, Advanced Emerging, Secondary Emerging or Frontier – according to a set of criteria developed in conjunction with international investors and the markets. This rules-based approach provides a transparent and objective mechanism for assessing markets.
Countries are promoted or demoted between categories via the Watch List and are added to the Watch List only when the Country Classification Committee agrees that a sufficient number of scores have been modified to warrant proposing a potential reclassification. The Watch List ensures that reclassification of countries is transparent to investors.
Argentina, currently classified as a ‘Frontier’ country, has been added to the list for possible demotion and removal from the index due to the continuing stringent capital controls imposed on international investors and the perceived lack of an independent regulatory authority protecting the rights of shareholders. Mongolia, currently not included in the index, has been added to the list for possible inclusion as a ‘Frontier’ country, based on its progress in developing a market infrastructure designed to increase foreign investment as well as its privatisation plans, scheduled for the near future.
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