Poland promoted to developed economy by FTSE Russell

Oct 3rd, 2017 | By | Category: Equities

Index provider FTSE Russell has announced the results of its annual review of country classifications. The standout change is the reclassification of Poland from emerging to developed economy, becoming the first country from Eastern Europe to attain the status.

Poland promoted to developed economy by FTSE Russell

Poland will be included in FTSE Russell developed indices from September 2018.

The implementation of Poland’s revised market status will commence from September 2018.

Marek Dietti, President of GPW, the Warsaw Stock Exchange, said: “The FTSE Russell upgrade of Poland to Developed Market status represents an acknowledgement of the progress of the Polish economy and capital markets and is a major step in their development.

“Poland has all the features of a developed market, including secure trading and post-trade services, as well as advanced infrastructure.”

Poland currently makes up 1.7% of the widely followed FTSE Emerging Index.

Within Europe, ETFs that track this index include the Vanguard FTSE Emerging Markets UCITS ETF (VFEM) which has assets under management of $1.5bn and a total expense ratio (TER) of 0.25%.

On inclusion into the FTSE Developed Europe Index, Poland will constitute approximately 0.80% of the index at current valuations. ETFs tracking this index include the Vanguard FTSE Developed Europe UCITS ETF (LON: VEUR) which has €1.3bn in AUM and a TER of 0.12%.

Polish equities have enjoyed a buoyant 2017. The Warsaw Stock Exchange Index (WIG) is up 24.9% in the year to 2 October. Inclusion into developed markets indices is only likely to increase capital flows into Polish equities.

FTSE Russell formally reviews country classifications within its FTSE Global Equity Index Series (FTSE GEIS) once a year in September, incorporating ongoing country classification research and feedback from independent external advisory committees to designate markets as developed, advanced emerging, secondary emerging or frontier.

FTSE Russell reviews its country classification in view of the regulatory environment, infrastructure and quality of the capital market, the depository and clearing system, as well as the status of derivatives markets.

Poland remains classified as an emerging market by the other major index provider, MSCI.

Following the September 2017 annual review by FTSE Russell, the full changes to the GEIS are as follows:

  • Poland, currently an advanced emerging market, to be reclassified as a developed market.
  • Kuwait, currently unclassified, to be included as a secondary emerging market.
  • Saudi Arabia close to upgrade and will be assessed again in March 2018.
  • China A-Shares to remain on the watch list for possible inclusion as a secondary emerging market.
  • Iceland to be added to the watch list for possible inclusion as a frontier market.
  • Nigeria and Mongolia to drop off the watch list.

Mark Makepeace, CEO FTSE Russell, commented: “Congratulations to Poland and Kuwait. The authorities in these countries have worked hard to achieve their promotions.”

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