MSCI's reclassification of Greece as DM unlikely to impact India

MSCI's decision to upgrade Greece to developed market status by 2027 is expected to have only a marginal impact on India, with limited changes to passive fund allocations

Global index provider MSCI’s decision to reclassify Greece under developed markets (DM) from emerging markets (EM) by May 2027 is unlikely to alter capital flows to India. The move will only result in a marginal uptick in passive allocations, analysts said.

 

Greece currently has a weighting of about 0.5 per cent in the MSCI EM index. Following its exit, this weighting will be redistributed among the remaining EM constituents in proportion to their free-float market capitalisation.

 

Abhilash Pagaria, head of Nuvama Alternative & Quant Research, said the move is largely symbolic from an EM flows perspective. “Given the relatively small weight, the overall impact is negligible and not a needle mover for India or broader EMs,” he said.

 

 

China accounts for slightly more than a fourth of the MSCI EM index, followed by Taiwan (22.5 per cent), South Korea (15.5 per cent), and India (12.6 per cent). The incremental weight freed up by Greece’s exit is expected to be absorbed proportionately by these markets, including India.

 

Market participants noted that passive funds tracking MSCI EM indices will rebalance portfolios closer to the May 2027 review.

 

Meanwhile, South Korea has renewed its push for reclassification to DM status. Earlier this year, it outlined a comprehensive road map aimed at meeting MSCI’s criteria. A potential upgrade of South Korea — given its significantly larger weighting — would have a far more meaningful impact on India and other EM constituents.

 

MSCI said its decision on Greece follows sustained improvements in market accessibility, infrastructure, and alignment with developed European market standards. 

   

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