Poland has joined a group of 25 of the world’s most advanced economies, including the US, the UK, Germany, France, Japan and Australia, as FTSE Russell officially reclassified the country from emerging market to developed market status this week.
The move marks Poland as the first country in almost a decade – and the first ever Central & Eastern European country – to be upgraded to developed market status.
‘Poland’s promotion to developed market status within FTSE Russell’s global equity benchmarks is a significant achievement,’ says Reza Ghassemieh, FTSE Russell chief research officer, in a statement announcing the news.
‘The Polish ministry of finance and the Warsaw Stock Exchange have long been committed to improving Poland’s capital markets infrastructure and strengthening its economy,’ he adds, noting the ‘rigorous criteria’ needed for classification as a developed market.
The reclassification ‘represents a fundamental change in the perception of Poland among global investors,’ says Marek Dietl, president of the Warsaw Stock Exchange, in the same statement, adding that ‘Poland’s reclassification will spark the interest of new investors in Polish issuers and open up enormous opportunities for the entire capital market.’
The classification means 37 companies – a list published in August – have been moved from FTSE indices of Emerging Markets to FTSE indices of Developed Markets. Among the 37 firms is just one large cap – PKO Bank Polski – 13 mid-cap companies and 12 small caps.
FTSE Russell is not alone in reclassifying Poland as a developed market. Stoxx, the Deutsche Börse Group index operator, also upgraded the country, a decision that took effect at the close of trading on September 21, moving it from the Emerging Markets 1500, an index covering global stocks, to Europe 600, which includes only companies from developed European markets. Eight Polish stocks made it into the index.
MSCI continues to classify Poland as an emerging market, though this in effect widens the country’s pool of potential investors.
‘The Polish Stock Exchange is in a comfortable position because Poland is a developed market in the classification of both FTSE Russell and Stoxx and an emerging market according to the global index provider MSCI,’ explains Dietl.
‘Most of the world’s investment funds (around 87 percent) invest in the countries with the most developed capital markets. We used to have access to between 12 percent and 13 percent of the global investment cash pool and now we will have access to 100 percent. But the reorganization of investment portfolios following the FTSE Russell decision will take a few years.’