Index provider MSCI has announced changes to its range of indices as part of its annual review of countries included in its line-up of proprietary indices.

After an appropriate review, the New York-based index provider said it would not include China A-shares in the MSCI Emerging Markets Index. It will, however, consider next year whether to include China A-shares in its 2015 index. In the meantime, on 27 June the company said it will introduce the new MSCI China A International index as a standalone index.

Korea & Taiwan
The firm also announced that two indices, the MSCI Korea Index and the MSCI Taiwan Indexes, will not be reclassified as “developed market” indices. The decision was made based upon “the absence of any significant improvements in key areas negatively affecting accessibility in the Korean and Taiwanese equity markets for the past few years,” MSCI noted. If meaningful improvements take place, it said, these two countries will be added back to the list for further review. Until then, they will remain classified as emerging market countries and will remain represented within the MSCI Emerging Markets Index.

Russia & Ukraine
In addition, MSCI said that it is closely monitoring the situation between Russia and the Ukraine for “potential material deterioration of the situation” which could result in third-party economic sanctions, capital or foreign exchange controls or the introduction of certain restrictive measures. MSCI said that it might launch a public consultation as to how to treat the MSCI Russian and/or MSCI Ukraine Indexes currently within the MSCI global investable market indexes.

Currently, 800 securities across 23 countries comprise the MSCI Emerging Markets Index and, according to MSCI, represent about 11% of world market cap. The index was launched in 1988 with only 10 countries represented.

According to the SRP US product database, between the start of 2011 and 11 June 2014, 614 individual structured products linked in some way to the MSCI Emerging Markets Index have been issued in the US with total sales of $2.25bn. Sales in 2011 were a sizeable $832m, while sales so far this year have just tipped $200m, although several new emerging market-linked structured products are set to price and be issued later this month.