FTSE, the indexing company behind
the $4.6 billion iShares FTSE China 25 Index Fund (NYSEArca:FXI), concluded its
2012 index review with no changes to its country classification, though it did
put Argentina on notice for possible future removal as a frontier market under
the FTSE system.

FTSE, which is probably most well
known as the owner of the benchmark for British stocks, also added Mongolia to
its list of countries in line for possible promotion to frontier market status,
saying in a press release that the east Asian country is developing a market
infrastructure that is attractive to foreign investors through improvements to
its trading, settlement and custody policies.

For its part, Argentina is being
singled out due to the South American country”s continuing stringent capital
controls imposed on international investors and a perceived lack of an
independent regulatory authority to protect the rights of shareholders. In
2010, FTSE demoted Argentina to frontier status from the indexing firm”s
“Secondary Emerging” category.

Including Argentina and Mongolia,
FTSE”s “Watch List” for potential changes to its family of indexes
now includes seven countries. The countries and the reasons they are on the
list are:

• China “A” Share –
  Possible inclusion as Secondary Emerging
• Greece – Possible demotion to
  Advance Emerging
• Kazakhstan – Possible inclusion
  in Frontier
• Kuwait – Possible inclusion as
  Secondary Emerging
• Mongolia – Possible inclusion
  in Frontier
• Poland – Possible promotion
  from Advanced Emerging to Developed
• Taiwan – Possible promotion
  from Advanced Emerging to Developed
• Ukraine – Possible inclusion in
  Frontier

All these questions will be taken up
a year at FTSE”s next annual classification in September 2013, the company
said.

In a separate annual country
classification review of its own earlier this year MSCI made no changes,
but kept South Korea and Taiwan under review for possible reclassification to
developed markets from their current status as emerging markets.

MSCI also added debt-gorged Greece
to its list of possible reclassifications, saying the southern European country
risked being demoted to an emerging markets country from its current
developed-market status. MSCI also said that Morocco has been added for
potential consideration as a candidate for the MSCI Frontier Markets Index.