The View | After MSCI’s questionable upgrade for Argentina and Saudi Arabia, do its powers need to be downgraded?

Last week brought a rare piece of good news for emerging markets. On Wednesday, MSCI, the New York-based index provider, decided to include both Saudi Arabia and Argentina in its benchmark emerging markets equity index. For Argentina, the news was particularly welcome, as it was accompanied by a decision to reclassify the country from a riskier “frontier market” to a more developed emerging market despite a run on its currency that has forced the nation to seek a US$50 billion bailout.

That Argentina, a serial defaulter on its external debt and a financial pariah before its return to the capital markets in 2016, has been upgraded to emerging market status, while Taiwan and South Korea – economies whose GDP per capita is higher than that of some countries in Western Europe – still await promotion to developed market status is perplexing, to say the least.

Consolidation among the world’s main indexers has left power concentrated among a handful of providers. In equities, three firms – MSCI, S&P Dow Jones Indices and the London Stock Exchange’s FTSE Russell – guide trillions of dollars of assets, holding huge sway over markets.