South Korea Finally Receives FTSE Developed Nation Status...

It's official, at last. Korea has been designated a developed nation by FTSE Group, an upgrade from emerging markets status that many market participants and money managers had expected to happen last year. Index house competitors Dow Jones and Wilshire Associates had already made the classification bump to developed status for South Korea, but Standard & Poor's, Russell and MSCI still classify South Korea as emerging.

Industry estimates are that moving a country between emerging and developed categories in FTSE indexes can cause an asset shift of anywhere from $10 billion to $25 billion by passive index managers around the world. FTSE says more than $2 trillion is benchmarked to its indexes. Many managers had complained that the indexing group was being too conservative by not already upgrading South Korea's status.

Besides South Korea, Taiwan has been often mentioned as an upgrade candidate; however, the board still felt that Taiwan had not made improvements in infrastructure equal to those made by South Korea. It will remain on FTSE's watch list, which means that Taiwan could be upgraded in September 2009. Korea is one of the largest constituents in most emerging markets benchmarks.

The 12-month process isn't expected to be completed until next year.

...While FTSE Gives Hints On Host Of National Statuses

At the same time that South Korea received FTSE Group's "developed" blessing, the index provider released its perspective on many other nations' status. Greece will retain its developed market status, but the FTSE committee that oversees classifications urged Greece to continue its efforts to improve transparency and other infrastructure issues. It will remain on the group's watch list through next year. Iceland was named a possible candidate next year to be considered an advanced emerging market. China "A" shares will remain on the watch list for promotion next year to secondary emerging markets status. Kuwait and the United Arab Emirates now will be put on the secondary emerging markets watch list for possible upgrades in their present status.

S&P Launches Blue-Chip India Index

Standard & Poor's has launched a blue-chip index for the Indian market covering 60 of the largest and most liquid stocks available to foreign investors. The S&P India Select Index follows the introduction by S&P of a much narrower index tracking India, the S&P India 10 Index, but that index's narrow focus makes it an unlikely choice to find applications in the ETF market.

The broader S&P India Select Index uses the S&P/IFCI India Index as its selection universe. Stocks to be included in the new index must have a minimum of $500 million in float-adjusted market capitalization and a three-month average daily trading value of more than $2 million. They also must be listed on the National Stock Exchange of India, the largest stock exchange in the country with regard to volume and turnover. The total number of stocks to be included in the index is not fixed, though it was introduced with 60 holdings. The most important feature of the index may be that it excludes stocks that have reached their foreign investment limits, which will help to make the index investable, a big issue in this space.

The iPath MSCI India Index ETN (NYSE: INP) found itself deviating from its underlying index when the Indian government imposed capital controls not too long ago, because the index it tracked did not take into account the capital restrictions. Both India-focused ETFs currently trading—the WisdomTree India Earnings and the PowerShares India Portfolio [NYSEArca: PIN]—were launched after INP first ran into difficulties, and have methodologies that account for limits on foreign investment.

State Street Global Advisors has a fund in registration that is set to track the S&P India Select Index.

Long And Short HK Indexes Debut

Going long and short in the volatile Chinese market has just become easier for money managers. The Hang Seng Indexes Co. has launched six new indexes that track leveraged and short positions in the Hang Seng Index and the Hang Seng China Enterprises Index.

The new Hang Seng index series includes four short indexes. Two offer a straight 1-to-1 short position on either the HSI or the HSCEI. The other pair offer -200 percent of the return of the HSI and HSCEI. The series also includes leveraged versions of both benchmarks.

The Hong Kong-based bank said the indexes will serve as the basis for exchange-traded products and institutional benchmarks.

There are many indexes targeting the Chinese market, and there are a host of China ETFs based on these benchmarks. However, most have been co-branded with Western index providers, such as the FTSE/Xinhua China 25 Index, or structured using ADRs, such as the Bank of New York Mellon China Select ADR Index. The local brand of Hang Seng makes it unique, and that is only enhanced by the fact that there are relatively few index competitors specifically offering long and short China benchmarks. MSCI Barra, Dow Jones and Standard & Poor's also all offer China benchmarks, including sector plays, but none has created levered or short versions.

Dow Jones Paves Way Into Infrastructure

Dow Jones has partnered with Brookfield Asset Management to create a family of indexes that focuses on the global infrastructure sector. Brookfield Asset Management, which is dedicated to infrastructure investing, says the global amount to be spent on infrastructure on an annual basis through 2015 is $2 trillion, or about $15 trillion total. Regardless of the exact number, the infrastructure area has been one of the hottest of late, as the emerging markets and commodities sector fuel interest in infrastructure-related events and investing.

The new index series includes composite and blue-chip indexes covering sectors and geographic regions. Composite and narrow indexes are available for the world, the Americas, Europe, Asia-Pacific and the World ex-U.S. The family's eight sector indexes cover airports, communications, oil and gas storage, ports, electricity transmission and distribution, toll roads, water and diversified infrastructure operations.

The headline Dow Jones Brookfield Global Infrastructure Index, which is the narrow version of the Dow Jones Brookfield Global Infrastructure Composite Index, has 94 components and a total float-adjusted market capitalization of $301.1 billion.