Korea fails to make World Government Bond Index

Finance

Published: 28 Mar. 2024, 15:53

Korea fails to make World Government Bond Index

A currency trader moves by the screens showing the Kospi, left, and the foreign exchange rate between U.S. dollar and Korean won in the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, Korea, Thursday. [AP/ YONHAP]

Korea failed to be included on the World Government Bond Index (WGBI), remaining on the watch list.

“FTSE Russell acknowledges the meaningful progress over the last six months, which is in line with the announced implementation target dates,” said the London-based organization that runs the index on Thursday.

The WGBI is a broad index designed to measure the performance of government bond markets and is a market gauge that could bring billions of dollars in foreign capital inflow.

The index operator noted the development of Korea’s financial system, including foreign exchange market reforms and international central securities depository connectivity.

Korea last year announced an extension of foreign exchange trading to correspond to London hours. The Korean Securities Depository also signed contracts to establish a link with overseas platforms like Clearstream and Euroclear.

Korea was placed on the WGBI watch list in September 2022 for the potential reclassification of its Market Accessibility Level from 1 to 2, and consideration for inclusion on the FTSE WBGI. It will remain on the watch list for potential inclusion on the index, which is scheduled to be published in September.

The Ministry of Economy and Finance said on the day that its goal is for Seoul is to be included on the index this year.

Financial Supervisory Service Gov. Lee Bok-hyun said last September that Korea’s regulators are optimistic about the country's inclusion on the WGBI, saying that Seoul has met most of the conditions required by the index compiler.

Lee noted in an interview with the Financial Times that more mid- to long-term bond funds will flow into the market if the country is included on the index.

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