There will be no reclassification of Taiwan and South Korea as developed markets in the FTSE Global Equity Index Series until March 2006 at the earliest as neither meets all the requirements for an upgrade, FTSE Group said yesterday. Both countries remain on a watch list and will be reviewed again in September next year. If they meet the market structure and quality criteria by then, they will be upgraded from their advanced emerging market status six months later. The China A-share market is on the watch list for possible inclusion in the FTSE Global Equity Index Series as an emerging market at the same time. Some market watchers were disappointed that FTSE did not lead the way with an upgrade, given that another index provider, Morgan Stanley Capital International, was looking at the same issue. But potential changes were not expected until early 2006 in any case. For Taiwan, the more important issue is always the increase of its market value representation in the MSCI indices from 55 per cent to 100 per cent, which will take place in two steps on November 30 and May 31 and is expected to attract a significant inflow of foreign capital. Foreign investors owned about 20 per cent of the Taiwan stock market, CLSA's head of Taiwan research Peter Sutton said, adding there was no reason why foreign investment should not rise to 30 per cent to 40 per cent, which was typical in other regional markets. 'It will probably take a year to get to 30 per cent, but over the next six months, I think we will see a big part of it,' he said at the annual CLSA Investors' Forum yesterday.