FTSE Group, the indexing unit of the London Stock Exchange, announced its annual country classification changes Monday, demoting Argentina and Morocco.
The index provider cited “continuing stringent capital controls imposed on international investors” in demoting Argentina, once South America’s second-largest economy behind Brazil, to unclassified market status from the frontier markets designation.
“Morocco will be demoted from Secondary Emerging to Frontier market status due to the continued decline in broad market liquidity below the level sufficient to support sizeable global investment. The demotion of Argentina from Frontier to unclassified market status and the demotion of Morocco from Secondary Emerging to Frontier market status will be implemented in conjunction with the June 2015 FTSE Global Equity Index Series quarterly review and the 2015 FTSE Frontier Index Series annual review,” said FTSE in a statement.
The EGShares Beyond BRICs ETF (NYSEArca: BBRC), which tracks the FTSE Beyond BRICs Index, currently features no exposure to Argentina or Morocco.
Markets on FTSE’s watch list for possible promotions in September 2015 include China’s A-shares. Although FTSE has yet to elevate China’s A-shares equities to secondary emerging markets status, in June the index provider introduced a series of indices that will allow market participants to include China A-shares in global indices at a time of their choosing. [FTSE Introduces A-Shares Indices]
Globally-listed China ETFs that benchmark to FTSE indices, a group including the iShares China Large-Cap ETF (NYSEArca: FXI), have over $20 billion in combined assets under management. [China ETFs Tracking FTSE Indices Have Over $20B in Assets]
Taiwan is also on FTSE’s watch list for a possible promotion to developed market status from advanced emerging markets territory. Earlier this year, FTSE rival MSCI (NYSE: MSCI) removed Taiwan from its of contenders that could earn an emerging-to-developed promotion.
Kuwait and Qatar are on the FTSE list for a possible promotion to secondary emerging markets status from frontier territory while Poland could make the leap to developed from advanced emerging status.
Kazakhstan, Latvia, Mongolia and Palestine could earn promotions to frontier markets territory in September 2015, according to FTSE. Greece, already classified as an emerging market by several other index providers, risks a demotion to advanced emerging status from the developed markets label.
ETF Trends editorial team contributed to this post.