South Korea has failed to be added to the World Government Bond Index (WGBI) run by FTSE Russell, missing market expectations of its early inclusion.
London-based FTSE Russell said Thursday that South Korea will remain on the watch list for possible country reclassification and inclusion in the WGBI.
Seoul was added to the WGBI watch list in September 2022. Analysts had expected South Korea to be included this March.
Now Seoul has to wait until September this year, when FTSE Russell announces its next decision on index inclusions.
The WGBI is a broad index designed to measure the performance of government bond markets, including local currencies and sovereign bonds of major advanced nations.
The index operator said it will keep tabs on South Korea's implementation of reform measures and market responses before a decision.
This photo taken on March 31, 2023, shows government bond yields being displayed on an electronic board in the lobby of the Yonhap News Agency building in central Seoul.
A Seoul official said Friday that the government will do its level best to be included in September by speeding up the implementation of market-reform policies and better communicating with the market.
South Korea and India are the only countries among the world's top 10 economies in terms of nominal gross domestic product that have yet to be included in the bond index.
South Korea has been pushing for inclusion in the global bond index, which it hopes will help lure foreign investment and raise investor confidence in its government bonds.
To that end, Seoul has been easing market regulations, including announcing its plan to abolish the existing mandatory registration policy for foreigners investing in listed securities.
The country also began exempting non-residents from taxes on interest income and capital gains, as well as foreign companies' investment in Treasurys and monetary stabilization bonds.
In February, Seoul also announced it will extend the operating hours of its foreign exchange market -- which currently runs for 6 1/2 hours from 9 a.m. to 3:30 p.m. -- to 17 hours to close at 2 a.m. the day after, as early as the second half of 2024.
Local brokerage house KB Securities Co. has estimated that South Korea would see an inflow of some US$67 billion should the country be included in the WGBI.
Source: Yonhap News Agency