South Korean Government Takes Action to Include Bonds in Global Bond Indexes

Korean Government on Global Bond Index
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According to the most senior economic policymaker in the Korean government, who spoke with international investors on Friday, the Korean government would make a new effort to have its sovereign bond included in the highest quality of global market indexes.

In order for Asia’s fourth-largest economy to be able to appeal to a greater number of international investors, the country’s Finance Minister Choo Kyung-ho revised the local financial laws to conform to “global norms.”

During a session that was co-hosted by the World Economic Forum in Davos, Switzerland, on Thursday, he made the following statement: “Starting this year, we will restructure the Korean capital market in a manner that is favorable to foreign investors and in accordance with global norms.”

Choo met with Lieve Mostrey, the head of Euroclear, a major worldwide central securities depository, in order to support Korea’s inclusion in the World Government Bond Index. This meeting was a part of Choo’s efforts to promote Korea’s inclusion in the index.

The Wide Government Bond Index (WGBI), which is managed by FTSE Russell, is a comprehensive index that was developed with the intention of measuring the performance of government bond markets. This index takes into account both local currencies and the sovereign bonds of large developed countries.

The participation of the nation in the WGBI would reportedly result in an influx of foreign investment valued between 50 and 60 trillion won ($40.4 billion). This information comes from the country’s Ministry of Finance.

When Korean market authorities proposed several new initiatives in September of the previous year with the intention of improving the structure and accessibility of their country’s capital market for both domestic and global investors, FTSE Russell added Korea to a watch list for potential inclusion in its WGBI. The watch list was added as a result of Korea’s potential inclusion in the index.

The elimination of the registration system for foreign investors, which has been seen for a long time as a barrier to the access that international investors have to the equities market, is one more tactic that is used to entice foreign investment.

Before being allowed to purchase stocks that are listed in South Korea, non-resident aliens are now obliged to provide their personal information to the Financial Supervisory Service.

The possibility of expanding the company’s trading hours for foreign currency is also being considered.

At the moment, the stock and currency exchange markets in South Korea are open from 9:00 in the morning to 3:30 in the afternoon. In the early part of this month, the minister of finance dropped a hint that the trading hours would be extended to 2:00 in the morning, commencing as early as the second half of 2024.

 

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