• Portugal will be added to the FTSE World Government Bond Index (WGBI) effective with the November 2024 index profiles.

FTSE Russell, the global index provider, has published the results of its March 2024 country classification review for equities and fixed income.

Fixed Income 

FTSE Russell announces that Portugal will be added to the FTSE World Government Bond Index (WGBI) after its local currency fixed-rate government bond market met all three eligibility criteria (market size, credit rating and a minimum Market Accessibility Level of “2”) for inclusion. Index inclusion will be effective from November 2024 and Portugal is projected to comprise 0.61% of the FTSE WGBI on a market value weighted basis.

South Korea will remain on the FTSE Fixed Income Country Classification Watch List for the potential reclassification of its Market Accessibility Level from 1 to 2. FTSE Russell acknowledges that local market authorities have made meaningful progress in the implementation of initiatives intended to improve the accessibility of South Korean government bonds for international investors, which would facilitate the fulfilment of the criteria for a Market Accessibility Level of 2 and inclusion in the FTSE WGBI.

India will remain on the FTSE Fixed Income Country Classification Watch List for the potential reclassification of its Market Accessibility Level from 0 to 1, and consideration for inclusion in the FTSE Emerging Markets Government Bond Index (EMGBI). FTSE Russell intends to continue its valuable dialogue with the Reserve Bank of India and welcomes feedback from an expanding cohort of international investors entering the Indian government bond market on the practicalities of their investment experience.

Switzerland will be removed from the FTSE Fixed Income Country Classification Watch List.

View the full FTSE Fixed Income Country Classification Announcement.

Equities

Egypt will remain on the Watch List for potential demotion from Secondary Emerging to Unclassified market status. Market participants report that previous delays in the ability of international institutional investors to repatriate capital from Egypt have been addressed, following Egypt securing investment from the Government of the United Arab Emirates and reaching a staff level agreement with the International Monetary Fund (IMF). Consequently, FTSE Russell will recommence implementing intra-review index changes for Egyptian index constituents effective from the open on Monday 01 April 2024.

As this improvement is a recent development, FTSE Russell will continue to monitor the market and provide an update on the Watch List status of Egypt by the end of June 2024.

Pakistan will remain on the Watch List for potential demotion from Secondary Emerging to Frontier market status. Over the last few years, Pakistan has experienced a steady decrease in its index weight within FTSE Russell global benchmarks. This has resulted in the market failing to meet the minimum investable market capitalisation exit level threshold required to retain a Secondary Emerging market status.

If Pakistan fails the minimum investable market capitalisation and securities count exit level thresholds, based on data as of the close on Friday 28 June 2024, then subject to final ratification by the FTSE Russell Index Governance Board, Pakistan will be demoted from Secondary Emerging to Frontier market status. This action will be taken in conjunction with the September 2024 index reviews that are effective from the open on Monday 23 September 2024. FTSE Russell will provide an update on the Watch List status of Pakistan at the beginning of July 2024.

Vietnam will remain on the Watch List for a possible reclassification from Frontier to Secondary Emerging market status as the market has yet to meet the settlement requirements stipulated in the FTSE Equity Country Classification Framework. The Vietnamese authorities remain committed to pursuing the various regulatory reforms required to attain Emerging market status as well as upgrading the main trading platform, which FTSE Russell continues to monitor. The next update on the status of Vietnam will be provided as part of the FTSE Equity Country Classification annual review of equity markets at the end of September 2024.

View the full FTSE Equity Country Classification Announcement.

David Sol, Global Head of Policy and Governance at FTSE Russell, comments: 

“At the heart of FTSE Russell’s approach to the classification of equity and fixed income markets is the ongoing monitoring of the accessibility and economic realities of global markets. Through our proactive programme of engagement and market analysis, FTSE Russell equity and fixed income indices remain fit for purpose and reflect both the opportunities and challenges faced by investors. Our semi-annual reviews are transparent and informative. They describe both the status quo and a path forward for the evolution of our indices and associated frameworks”.    

More information on the Equity Country Classification framework and the Fixed Income Country Classification framework can be found on our website. The next update will be published in September 2024.

Source: LSEG