MSCI Announces the Results of the 2012 Annual Market Classification Review

The MSCI Greece Index will be added to the review list because it no longer meets Developed Markets size standards with only two eligible index constituents and because the Greek authorities have failed over the last several years to bring equity market regulations and practices in line with the evolving standards of Developed Markets. MSCI’s decision to add Greece to the review list is based on structural analysis of the Greek equity market and is not related to the country’s potential exit from the European Monetary Union. More specific information on the treatment of Greece in the MSCI Indices in case of exit from the European Monetary Union can be found on MSCI’s web site at http://www.msci.com/products/indices/msci_greece_qa/.

The MSCI Morocco Index will be added to the review list as liquidity levels on the Moroccan equity market have declined substantially in the past years and are currently in line with Frontier Markets levels. As a reminder, Size and Liquidity Requirements are one of the three criteria in the MSCI Market Classification Framework, available on msci.com.

Despite important positive developments on the provision of stock market data, the Korean authorities have made little progress on other significant accessibility issues highlighted in previous annual market classification reviews. In particular, limitations in currency trading and equity settlement across multiple accounts remain unchanged and prevent for now a reclassification of the MSCI Korea Index to Developed Markets. Developed markets are characterized by highly efficient and mostly standardized operating practices. Introducing non-standard market practices would be forcing a high number of investors to change what is mostly a well run and operationally robust framework. This is of particular concern to large institutions managing thousands of funds and to market participants such as indexers or broker-dealers that are providing investment products that closely replicate indices.

The MSCI Taiwan Index meets many Developed Markets criteria, including economic development and market size and liquidity but market accessibility issues related to currency trading and equity market settlement still prevent the reclassification of the MSCI Taiwan Index to Developed Markets.

The only remaining issue preventing the reclassification of MSCI Qatar to Emerging Markets is very low Foreign Ownership Limits (“FOL”) that make it difficult for foreign investors to increase their allocations to the Qatari equity market. Recent measures introduced by the Qatar Exchange (“QE”) are expected to eliminate the need for international investors to operate with a dual account structure.

MSCI will maintain the MSCI UAE Index in Frontier Markets as no enhancements with respect to the operational issues mentioned in the last review are expected to be implemented in the United Arab Emirates before 2013.

MSCI welcomes the recent positive developments in the Chinese domestic equity (“China A”) market with regards to the increase in investment quotas available to international investors. Despite these encouraging developments, there are still some major constraints, such as issues related to the mobility of capital, qualification of QFIIs and the country quota ceilings that currently prevent any potential inclusion of the MSCI China A Index in the MSCI Emerging Markets Index. In particular, many small to mid-size institutions worldwide would not qualify for a QFII quota at the levels currently set by the Chinese authorities and, hence, would not be able to replicate the index.

As a reminder, every June MSCI communicates its conclusions following discussions with the investment community on the list of countries under review and announces the new list of countries, if any, under review for potential market reclassification in the upcoming cycle. MSCI will communicate its decisions resulting from this Annual Market Classification Review in June 2013.

A longer and more detailed version of this press release has been posted on MSCI’s web site at:http://www.msci.com/eqb/pressreleases/archive/Mkt_Class_2012.pdf

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MSCI will hold two press conference calls to answer questions from the media. Note that these press conference calls are restricted to journalists.

Clients and other interested parties should contact MSCI Global Client Service with any enquiries.

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About MSCI

MSCI Inc. is a leading provider of investment decision support tools to investors globally, including asset managers, banks, hedge funds and pension funds. MSCI products and services include indices, portfolio risk and performance analytics, and governance tools.

The company’s flagship product offerings are: the MSCI indices with approximately USD 7 trillion estimated to be benchmarked to them on a worldwide basis¹; Barra multi-asset class factor models, portfolio risk and performance analytics; RiskMetrics multi-asset class market and credit risk analytics; MSCI ESG (environmental, social and governance) Research screening, analysis and ratings; ISS governance research and outsourced proxy voting and reporting services; FEA valuation models and risk management software for the energy and commodities markets; and CFRA forensic accounting risk research, legal/regulatory risk assessment, and due‐diligence. MSCI is headquartered in New York, with research and commercial offices around the world.

¹As of June 30, 2011, based on eVestment, Lipper and Bloomberg data.

For further information on MSCI, please visit our web site atwww.msci.com
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