Two Stock Markets Downgraded by MSCI Have Now Made a Successful Comeback
Jakarta, CNBC Indonesia — Several stock markets have rebounded after being “downgraded” by global index provider Morgan Stanley Capital International (MSCI). Greece and Bulgaria are among them.
1. Greece
In 2013, MSCI downgraded Greece from developed-market status to advanced emerging-market status, amid a debt crisis that shook the country’s economy.
Now, in 2026, Greece’s stock market has reached a significant milestone in the country’s economic recovery: it has regained developed-market status.
According to Euronews, FTSE Russell announced the reclassification, which took effect last September. It moved Greece from the advanced emerging-market category to developed-market status.
The move recognises progress in Greece’s capital market after years of reforms aimed at restoring the economy and investor confidence. It marks the latest development in the country’s recovery.
The FTSE Russell reclassification transferred 62 Greek shares from its advanced emerging-market index to its developed-market index. This could broaden access to international capital, particularly from institutional investors and fund managers tracking developed-market indices.
Athens Exchange Group chief executive Yianos Kontopoulos called the upgrade an important achievement. He said it could expand the international investor base, attract funds tracking developed-market indices and create new financing opportunities for listed companies.
In addition to FTSE Russell, index provider STOXX has also classified Greece as a developed market. This has enabled nine Greek companies to join the pan-European STOXX Europe 600: National Bank of Greece, Eurobank, Piraeus Bank, Alpha Bank, GEK Terna, Jumbo, Motor Oil, PPC and Metlen.
Index adjustments also prompted a surge in trading on the Athens Stock Exchange. Funds tracking emerging-market indices had to sell Greek shares, while funds tracking developed-market indices had to buy them to rebalance their portfolios.
Greek financial website Euro2day reported that the value of shares traded in Athens reached a record €4.26 billion in the closing auction when the good news was announced. The figure includes both purchases and sales and surpassed the previous record of about €3.03 billion, set in May 2008.
However, a spike in trading driven by index rebalancing does not necessarily translate into sustained foreign investment flows. The next challenge is to maintain liquidity and investor interest once portfolio adjustments are complete.
Greece’s stock-market upgrade coincides with improved assessments of the country’s finances by credit rating agencies. In September, Moody’s changed the outlook on Greece’s Baa3 sovereign rating from stable to positive.
The change opens the possibility of an upgrade if economic and fiscal improvements continue. Meanwhile, Scope Ratings raised Greece’s rating from BBB to BBB+, with a stable outlook.
Both agencies cited a lower debt burden, budget surpluses, higher tax revenues and reforms strengthening the economy and state institutions. Greek Finance Minister Kyriakos Pierrakakis said the rating decisions and stock-market upgrade showed that his country had become more resilient and credible.
He nevertheless stressed that the government must maintain fiscal discipline, encourage investment and continue reforms to boost productivity and wages. Greece’s experience shows that restoring investor confidence requires sustained reform.
An upgraded index classification can widen access to global capital. Long-term success, however, will continue to depend on economic conditions, the quality of the capital market and consistent government policy.
2. Bulgaria
The Bulgarian Stock Exchange (BSE) has improved its standing with global index provider MSCI. After being downgraded from frontier-market status to standalone-market status, Bulgaria is now set to return to the frontier-market category.
The downgrade dates back to August 2016, when MSCI cited a continued decline in the size and liquidity of Bulgaria’s stock market.
The reclassification was announced in June, but is scheduled to take effect during the May 2027 index review.
“This is a historic moment for Bulgaria’s capital market,” Bulgarian Stock Exchange chief executive Manyu Moravenov said at the time, referring to MSCI’s announcement, according to the Bulgarian News Agency.
“MSCI’s decision sends a clear signal to the international investment community that Bulgaria is becoming an increasingly attractive investment destination, and that reforms and efforts to develop the market are paying off,” he said.
“The reclassification has the potential to increase the international visibility of Bulgarian listed companies, attract new investors and create additional opportunities for businesses to raise capital,” he added.
The upgrade is an example of how a stock market can re-enter a category more closely integrated with international investors after improving its liquidity and accessibility.
MSCI said the proposal to upgrade Bulgaria was first put to consultation in 2024. At the time, several Bulgarian shares met the size and liquidity requirements for frontier-market inclusion.
The decision was delayed after international institutional investors raised concerns about limited market liquidity and the time needed to adopt the euro. Since then, conditions in Bulgaria’s stock market have been assessed as having improved significantly.
MSCI said market participants agreed that liquidity on the BSE had improved substantially. The progress was supported by a larger number of shares meeting frontier-market size and liquidity requirements, as well as an increase in trading value on the exchange.
Bulgaria’s transition to the euro also proceeded without significant operational problems. The country officially adopted the euro on 1 January 2026.
As part of the change, the BSE’s trading and settlement infrastructure fully switched to euro denomination. Bulgaria had previously migrated, in September 2023, to the European Central Bank’s securities settlement platform, TARGET2-Securities (T2S).
The process was not immediate. It involved consultation, a delay in the decision and improvements in market conditions before MSCI ultimately decided to raise Bulgaria’s classification.
MSCI said a market’s classification is determined by the accessibility and investability that international institutional investors experience in practice. Index and market classifications, it said, are not permanent assessments.
MSCI can act when market access and investor experience deteriorate. Conversely, a market can be upgraded when accessibility and investability improve significantly and sustainably.
“The classification of a market’s status must be continually assessed in light of changing market conditions and the experience of international investors,” MSCI’s head of Market Classification and Taxonomy said in a statement concerning the BSE.
“When market access or the investor experience deteriorates, MSCI needs to take action. Conversely, a market can be upgraded if its accessibility and investability improve significantly and sustainably,” the official said.