Trading hours of local exchange market to be extended

Finance Minister Choo Kyung-ho speaks at a press conference in central Seoul on Thursday. [YONHAP]

Korea will extend the trading hours of the country's foreign exchange market to attract overseas investors.

Trading hours will be extended to 2 a.m. starting in the second half of next year at the earliest, according to Finance Minister Choo Kyung-ho Thursday.

Currently, the local foreign exchange market operates from 9 a.m. to 3:30 p.m.

The ministry hopes the extra hours will help upgrade Korea in the international indexes, which in turn could attract bigger investment from foreign traders.

“Policies advancing the financial market have been relatively slow in Korea compared to the country’s global reputation,” said Choo at a press conference in central Seoul on Thursday. “I believe various regulations have caused the market to be operated too exclusively.”

Choo brushed off concerns about any market volatility the change may bring.

“If the market size grows and players become more diverse, that itself will reduce market volatility,” he said.

Korea was added to the World Government Bond Index's (WGBI) watch list in September.

The WGBI measures the performance of fixed-rates, local currencies, investment grades and sovereign bonds. It is operated by FTSE Russell, a global provider of benchmarks, analytics and data solutions.

Korea hopes to be included on the WGBI index by September.

Choo, however, said it is too early to discuss the timing of Korea's inclusion on the MSCI Developed Market Index.

New York’s MSCI is an investment research firm that provides stock indexes.

Choo vowed to come up with an improved dividend system and practice it next year to promote long-term investment.

Companies listed in Korea decide on the amount of dividend they will pay out to shareholders at shareholder meetings in March. This forces shareholders to invest and hold onto dividend stocks without being aware of how much they will receive.

The Financial Services Commission (FSC) plans to let shareholders know in advance how much dividend they will receive for buying the stocks.

Uncertainties related to the system were cited as the reason Korea’s dividend stocks are undervalued.

The government said it will “make 2023 the first year that marks Korea’s premium market by drastically improving the system and the investment environment that meets the global standard,” Choo said.

Choo brushed off concerns about stimulating the real estate market through rapid deregulations.

The policies adopted by the previous government were “anti-market and an excessive infringement of property rights.”

Choo added that the recent deregulations are “normalizing” policies.

The government plans to maintain regulation on the debt service ratio (DSR) to prevent excessive mortgages and credit loans. DSR equals loan payments divided by income.

BY JIN MIN-JI [jin.minji@joongang.co.kr]