Greece Downgraded to Emerging Market Status

Equity index provider MSCI says Greece failed on ‘multiple criteria’ to meet minimum requirements necessary to be considered developed country.

Greece suffered the ignominy of becoming the first developed country to be downgraded to emerging-market status by index provider MSCI.

Announcing the results of its 2013 annual market classification review, the most widely used equity index provider announced that Greece failed to qualify for developed country status “on several market accessibility criteria”.

An MSCI announcement said: “The minimum standards that currently prevail in developed markets reflect continuous market improvements introduced by authorities in other countries over the years. However, very few of these improved market practices have been reflected in the Greek market.”

It added: “This has led to Greece now failing to meet on multiple criteria: securities borrowing and lending facilities, shortselling and transferability.”

Reuters reported that MSCI, whose indices are tracked by $7 trillion worldwide and $1.3 trillion in emerging markets alone, nonetheless said less stringent entry criteria for the emerging index meant that a number of Greek companies would be eligible to join, as opposed to just two that are in the developed index.

“We would at the time of change, which would be November, apply the new threshold for inclusion.. It will become a broader, more representative index,” MSCI managing director Remy Briand said.

“Whether it benefits the equity market or not…it’s hard to gauge whether there will be more interest,” he said.