FTSE Russell issued FTSE Fixed Income Country Classification Announcement March 2024 on March 27 (local time). In this announcement, Korea remains on the FTSE Fixed Income Country Classification Watch List for consideration for inclusion in the FTSE World Government Bond Index (WGBI), since it was first named on the watch list in September 2022.
FTSE Russell stressed notable progress in the Korean government’s efforts to improve accessibility to the government bond market for foreign investors over the past six months, with the initiative proceeding in line with previously announced plans. Moreover, it highly praised the government’s endeavors to resolve concerns over practical issues raised by global investors regarding the implementation of these measures.
* FTSE Russell acknowledges the meaningful progress over the last six months, which is in line with the announced implementation target dates. FTSE Russell also recognises the commitment of the South Korean market authorities to address investor feedback regarding practical issues in the implementation of its reforms.
The government has been diligently pushing forward various measures as planned to elevate the accessibility of the government bond market for foreign investors to the level of that of advanced countries. Since January 2023, non-taxation for foreign investors’ government bond investment income has been implemented, and the Investor Registration Certificate (IRC) was abolished starting from December 2023.
Furthermore, it will open omnibus accounts for government bonds linked with the International Central Securities Depositories (ICSD) in June of this year, encouraging foreign investors to more conveniently invest in government bonds through Euroclear or Clearstream. As for the foreign exchange (FX) market, trial transactions have been conducted since earlier this year ahead of the official implementation of the ‘Improvement Measures for FX market Structure’ slated for July this year. The measures cover major changes such as allowing registered foreign institutions (RFIs) to directly participate in the onshore FX market and extending market hours (09:00-15:30 → 09:00-02:00 a.m. of the following day). In addition, institutional improvements such as permitting temporary overdrafts for securities settlement purposes were completed in March 2024.
The government plans to carry out structural reforms for improving foreigners’ investment environment without a hitch, with the aim of WGBI inclusion this year. Also, recognizing that global investors’ confidence in the accessibility of the Korean government bond market and its attractiveness are decisive factors to be included in the WGBI, the government will expand communication with global investors going forward.
Please refer to the attached files.
