Developed market

In investing, developed markets are those countries that are thought to be the most developed and therefore less risky.

Contents

FTSE Group's 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.[1] According to the FTSE Group the following 26 countries are classified as developed markets:

FTSE Criteria

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

  1. They are high income economies (as measured by the World Bank GNI Per capita Rating, 2008)
  2. Market and Regulatory Environment EMG EMG
    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
  3. 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
  4. 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
  5. Derivatives
    1. Developed derivatives markets
  6. Size of Market
    1. Market Capitalisation
    2. Total Number of Listed Companies (as at 31st Dec 2008)

MSCI list

As of May 2010, MSCI Barra classified the following 27 countries as developed markets[3]:

S&P list

As of 31 December 2010, Standard and Poor's classified the following 26 countries as developed markets[4]:

Dow-Jones list

As of May 2010, Dow Jones classified the following 30 countries as developed markets[5]:

Russell Global list

As of June 2009, Russell Investments classified the following 26 countries as developed markets:[6][7]

See also

References

  1. ^ http://www.ftse.com/Indices/Country_Classification/Downloads/FTSE_Country_Classification_Sept_09_update.pdf
  2. ^ http://www.ftse.com/Indices/Country_Classification/index.jsp and http://www.ftse.com/Indices/Country_Classification/Downloads/Asia_Pacific_Matrix_Sept_09.pdf
  3. ^ MSCI Global investable Market Indices Methodology, May 2010; p. 48 footnote no. 9. MSCI developed markets.
  4. ^ The S&P Global Broad Market Index, 31 December 2010; p. 2.
  5. ^ Dow Jones Total Stock Market index.
  6. ^ Russell Global Indexes
  7. ^ For more on Russell Indexes, see [1]