Developed market

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In investing, a developed market is a country that is most developed in terms of its economy and capital markets. The country must be high income, but this also includes openness to foreign ownership, ease of capital movement, and efficiency of market institutions. This term is contrasted with developing market (emerging markets and frontier markets are types of developing markets).

Contents

FTSE Group list

FTSE Group, a provider of economic and financial data, assigns the market status of countries as Developed, Advanced Emerging, Secondary Emerging or Frontier on the basis of their economic size, wealth, quality of markets, depth of markets, breadth of markets. From 26 September 2019, FTSE Group classifies 26 countries as developed markets: [1]

FTSE criteria

Developed countries all have met criteria under the following categories: [2] [3]

  1. They are high income economies (as measured by the World Bank GNI per capita Rating, Market and Regulatory Environment)
    1. Formal stock market regulatory authorities actively monitor market (e.g., SEC, FSA, SFC)
    2. Fair and non-prejudicial treatment of minority shareholders
    3. Non or selective incidence of foreign ownership restrictions
    4. No objections or significant restrictions or penalties applied on the repatriation of capital
    5. Free and well-developed equity market
    6. Free and well-developed foreign exchange market
    7. Non or simple registration process for foreign investors
  2. Custody and Settlement
    1. Settlement – Rare incidence of failed trades
    2. Custody-Sufficient competition to ensure high quality custodian services
    3. Clearing & settlement – T +3 or shorter, T+7 or shorter for Frontier
    4. Stock Lending is permitted
    5. Settlement – Free delivery available
    6. Custody – Omnibus account facilities available to international investors
  3. Dealing Landscape
    1. Brokerage – Sufficient competition to ensure high quality broker services
    2. Liquidity – Sufficient broad market liquidity to support sizeable global investment
    3. Transaction costs – implicit and explicit costs to be reasonable and competitive
    4. Short sales permitted
    5. Off-exchange transactions permitted
    6. Efficient trading mechanism
    7. Transparency – market depth information / visibility and timely trade reporting process
  4. Derivatives
    1. Developed derivatives markets
  5. Size of Market
    1. Market Capitalisation
    2. Total Number of Listed Companies (as of 31 December 2008)

MSCI list

As of June 2019, MSCI classified the following 25 countries as developed markets: [4] [5]

According to MSCI Global investable Market Indexes Methodology – November 2019, [4] Cyprus and Luxembourg "are part of the developed market universe", but "given their modest size, these markets are not included in the MSCI World index".

S&P list

As of 24 June 2019, Standard and Poor's classifies the following 25 countries as developed markets: [6]

STOXX list

As of 23 September 2019, STOXX classifies the following 25 countries as developed markets: [7]

Table

Country FTSE [1] [8] MSCI [4] S&P [6] STOXX [7]
Flag of Australia (converted).svg  Australia Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Austria.svg  Austria Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Belgium (civil).svg  Belgium Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Canada (Pantone).svg  Canada Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Cyprus.svg  Cyprus Red x.svgGreen check.svgRed x.svgRed x.svg
Flag of Denmark.svg  Denmark Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Finland.svg  Finland Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of France.svg  France Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Germany.svg  Germany Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Hong Kong.svg  Hong Kong Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Ireland.svg  Ireland Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Israel.svg  Israel Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Italy.svg  Italy Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Japan.svg  Japan Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Luxembourg.svg  Luxembourg Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of the Netherlands.svg  Netherlands Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of New Zealand.svg  New Zealand Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Norway.svg  Norway Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Poland.svg  Poland Green check.svgRed x.svgRed x.svgGreen check.svg
Flag of Portugal.svg  Portugal Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Singapore.svg  Singapore Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of South Korea.svg  South Korea Green check.svgRed x.svgGreen check.svgRed x.svg
Flag of Spain.svg  Spain Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Sweden.svg  Sweden Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of Switzerland (Pantone).svg   Switzerland Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of the United Kingdom.svg  United Kingdom Green check.svgGreen check.svgGreen check.svgGreen check.svg
Flag of the United States.svg  United States Green check.svgGreen check.svgGreen check.svgGreen check.svg

See also

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References

  1. 1 2 "FTSE Equity Country Classification September 2019 Annual Announcement" (PDF). FtseRussell.com. Retrieved 14 December 2019.
  2. "Research FTSE Country Classification Process" (PDF). Ftse.com. March 2018. Retrieved 2 March 2019.
  3. "FTSE QUALITY OF MARKETS CRITERIA (ASIA PACIFIC)" (PDF). Ftse.com. September 2018. Retrieved 2 March 2019.
  4. 1 2 3 "MSCI GLOBAL INVESTABLE MARKET INDEXES METHODOLOGY" (PDF). Msci.org. Retrieved 14 November 2019.
  5. "Market classification – MSCI". Msci.com. Retrieved 2 March 2019.
  6. 1 2 "S&P Global Equity Indices Monthly Update" (PDF). Us.spindices.com. August 13, 2019. p. 2. Retrieved 14 December 2019.
  7. 1 2 "STOXX Regional Classification effective Sep. 23, 2019" (PDF). stoxx.com. p. 1. Retrieved 14 December 2019.
  8. "FTSE Russell announces results of FTSE annual country classification review". FTSE Russell. 2017-09-29. Retrieved 2017-10-18.