{"id":2206739,"date":"2024-10-09T16:24:50","date_gmt":"2024-10-09T07:24:50","guid":{"rendered":"https:\/\/koreapro.org\/?p=2206739"},"modified":"2024-10-10T13:29:26","modified_gmt":"2024-10-10T04:29:26","slug":"south-korea-to-join-major-bond-index-opening-doors-for-foreign-investment","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/10\/south-korea-to-join-major-bond-index-opening-doors-for-foreign-investment\/","title":{"rendered":"South Korea to join major bond index, opening doors for foreign investment"},"content":{"rendered":"
FTSE Russell <\/span>announced<\/span><\/a> on Wednesday that it will include South Korea on its World Government Bond Index (WGBI) beginning in Nov. 2025, opening the door to substantial foreign capital inflows.<\/span><\/p>\n The decision follows Seoul\u2019s efforts to reform its financial markets in recent years to improve accessibility to foreign investors and promises to create significant opportunities for economic growth.<\/span><\/p>\n However, the potential for increased volatility and regulatory challenges underscores that the development is not without risk, and how South Korea approaches financial liberalization going forward could determine whether it can finally take the next step toward being recognized as a developed economy.<\/span><\/p>\n WGBI INCLUSION EXPLAINED<\/b><\/p>\n FTSE Russell\u2019s <\/span>decision<\/span><\/a> to include South Korea in the WGBI, a benchmark followed by global investors managing $29 trillion in assets, highlights the country\u2019s growing prominence in international finance.<\/span><\/p>\n The company reclassified South Korea\u2019s market accessibility from one to two, meeting the necessary criteria for WGBI inclusion.<\/span><\/p>\n The phased inclusion, set to begin in Nov. 2025 and roll out over a year, will elevate South Korea\u2019s standing in global capital markets.<\/span><\/p>\n Industry experts <\/span>reportedly<\/span><\/a> believe that this inclusion could see South Korea attract as much as $67 billion (90 trillion won) in foreign capital over the next few years as international investors seek exposure to South Korean government bonds.\u00a0<\/span><\/p>\n For investors, South Korean bonds will represent 2.22% of the WGBI, positioning the country as a critical player among developed bond markets. The opportunity for South Korea is clear: greater liquidity, lower borrowing costs and increased foreign investor participation.<\/span><\/p>\n For instance, South Korea\u2019s green energy projects, including offshore wind farms and renewable energy infrastructure, could attract more foreign capital, driving down borrowing costs and accelerating project timelines.<\/span><\/p>\n Similarly, the semiconductor industry may see an influx of foreign investment, enabling firms like Samsung and SK Hynix to expand production capacity and develop advanced technologies.<\/span><\/p>\n Lower financing costs will also benefit the country\u2019s <\/span>long-suffering<\/span><\/a> construction and real estate sectors, where major developments could see improved funding conditions, further boosting the country\u2019s economic growth prospects.<\/span><\/p>\n