MSCI Market Classification Framework
MSCI Market Classification Framework
June 2014
MSCI Market Classification Framework
The classification of markets is a key input in the process of index construction as it drives the composition of the investment opportunity sets to be represented. The approach used by MSCI aims to reflect the views and practices of the international investment community by striking a balance between a country’s economic development and the accessibility of its market while preserving index stability.
The MSCI Market Classification Framework consists of following three criteria: economic development, size and liquidity as well as market accessibility.
In order to be classified in a given investment universe, a country must meet the requirements of all three criteria as described in the table below.
Criteria
Frontier
Emerging
Developed
No requirement
No requirement
Country GNI per capita 25% above the
World Bank high income threshold* for
3 consecutive years
2
USD 630 mm
USD 49 mm
2.5% ATVR
3
USD 1260 mm
USD 630 mm
15% ATVR
5
USD 2519 mm
USD 1260 mm
20% ATVR
At least some
At least partial
Modest
Modest
Significant
Significant
Good and tested
Modest
Very high
Very high
Very high
Very high
A Economic Development
A.1
Sustainability of economic development
B Size and Liquidity Requirements
B.1
Number of companies meeting the following Standard Index criteria
Company size (full market cap) **
Security size (float market cap) **
Security liquidity
C Market Accessibility Criteria
C.1
C.2
C.3
C.4
Openness to foreign ownership
Ease of capital inflows / outflows
Efficiency of the operational framework
Stability of the institutional framework
* High income threshold for 2012: GNI per capita of USD 12,615 (World Bank, Atlas method)
** Minimum in use for the May 2014 Semi-Annual Index Review, updated on a semi-annual basis
The economic development criterion is only used in determining the classification of Developed Markets while that distinction is not relevant between
June 2014
MSCI Market Classification Framework
The classification of markets is a key input in the process of index construction as it drives the composition of the investment opportunity sets to be represented. The approach used by MSCI aims to reflect the views and practices of the international investment community by striking a balance between a country’s economic development and the accessibility of its market while preserving index stability.
The MSCI Market Classification Framework consists of following three criteria: economic development, size and liquidity as well as market accessibility.
In order to be classified in a given investment universe, a country must meet the requirements of all three criteria as described in the table below.
Criteria
Frontier
Emerging
Developed
No requirement
No requirement
Country GNI per capita 25% above the
World Bank high income threshold* for
3 consecutive years
2
USD 630 mm
USD 49 mm
2.5% ATVR
3
USD 1260 mm
USD 630 mm
15% ATVR
5
USD 2519 mm
USD 1260 mm
20% ATVR
At least some
At least partial
Modest
Modest
Significant
Significant
Good and tested
Modest
Very high
Very high
Very high
Very high
A Economic Development
A.1
Sustainability of economic development
B Size and Liquidity Requirements
B.1
Number of companies meeting the following Standard Index criteria
Company size (full market cap) **
Security size (float market cap) **
Security liquidity
C Market Accessibility Criteria
C.1
C.2
C.3
C.4
Openness to foreign ownership
Ease of capital inflows / outflows
Efficiency of the operational framework
Stability of the institutional framework
* High income threshold for 2012: GNI per capita of USD 12,615 (World Bank, Atlas method)
** Minimum in use for the May 2014 Semi-Annual Index Review, updated on a semi-annual basis
The economic development criterion is only used in determining the classification of Developed Markets while that distinction is not relevant between