Dow Jones Indexes Reclassifies Colombia to 'Emerging' From 'Frontier' Markets Status After Annual Review of Its Country Classification System

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Dow Jones Indexes, a leading global index provider, today announced it reclassified Colombia to "Emerging Markets" status from "Frontier Markets" status, and added 11 countries to Frontier Markets status following the annual review of theDow Jones Indexes Country Classification System. The changes are effective as of March 19, 2012.

Designed with the global investor in mind, the Dow Jones Indexes Country Classification System is used to classify all countries covered in Dow Jones Indexes' major index families. Assessments of the countries are used to produce a country classification assignment into one of three categories:

-Developed Markets: the most accessible to, and supportive of, foreign investors with a high degree of consistency across these markets;

-Emerging Markets, which generally have less accessibility relative to developed markets, but demonstrate a level of openness; and

-Frontier Markets, which are typically much less accessible to foreign investors, exhibit notable limitations in their regulatory and operational environments, and support a smaller investment landscape; Frontier Markets tend to be much less robust and in the earlier stages of development.

The 11 countries newly covered by the system under the Frontier Markets designation include:

Four from Europe

- Croatia

- Macedonia
- Serbia

- Ukraine

Four from Middle East and Africa

- Lebanon

- Kenya

- Nigeria

- Tunisia

Three from Asia/Pacific

- Bangladesh

- Kazakhstan

- Vietnam

Combined with the move of Colombia to the Emerging Markets list from the Frontier Markets list, the addition of 11 countries increases the total number of Frontier Markets countries to 30 from 20; the reclassification of Colombia pushes the total number of Emerging Markets countries to 19 from 18. The number of Developed Markets remains unchanged at 27, meaning the number of countries covered by the Dow Jones Indexes Country Classification System totals 76, up from 65 before the June annual review.

Country classification process

The Dow Jones Indexes Country Classification System attempts to strike an appropriate balance between rules-based methodology that incorporates objective data with the subjective guidance of the Dow Jones Index Oversight Committee (DJIOC), which renders the final classification assignment decision for each country.

The DJIOC reviews each country's classification status individually -- utilizing quantitative and qualitative elements while leveraging internal and external resources. The committee then assesses the countries according to a pre-defined framework built around the needs of international portfolio investors in three broad categories: market and regulatory structure, trading environment and operational efficiency. Ultimately, the DJIOC bases its decisions on information deemed relevant. 

Country assignments are formally reassessed each year in June by the DJIOC. A public announcement of classification changes, if any, is made in September of each year.