Korea to join key FTSE Russell global bond index in 2025

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Korea to join key FTSE Russell global bond index in 2025

Published: 09 Oct. 2024, 08:03 Updated: 09 Oct. 2024, 09:50

PARK EUN-JEE
park.eunjee@joongang.co.kr

A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London. [REUTERS]

Korea will be included in a key global government bond index run by FTSE Russell, starting in November next year, said the London-based organization.

The decision is expected to attract at least 70 trillion won ($52 billion) into local bonds, according to local media reports citing experts and government officials.

The country will be added to FTSE Russell's World Government Bond Index (WGBI), effective with November 2025 index profiles, and phased in over a one-year period on a quarterly basis, as its market accessibility level will be reclassified from 1 to 2, the organization said in a report released on Tuesday (local time).

The inclusion decision was made two years after the country was placed on the watch list.

"Several initiatives intended to improve the accessibility of Korean government bonds for international investors have been implemented by Korean market authorities, which have facilitated the fulfillment of the criteria for a Market Accessibility Level of 2," the FTSE said.

With a market value of $29 trillion, the WGBI is a highly sought-after benchmark that would attract substantial capital inflows from global investors.

FTSE Russell notes a set of market reform measures by the Korean government as positive developments, including the extension of local currency trading hours, allowing third-party foreign exchange, and the establishment of a settlement system with Euroclear Bank and Clearstream to improve access for foreign investors to its government bond market.

"FTSE Russell congratulates the Korean Ministry of Economy and Finance on its efforts to expand and encourage global investment in its local government bond market by implementing changes that have met the rigorous criteria for WGBI inclusion, as well as its ongoing commitment to addressing the practical feedback of international bond investors participating in its evolved market structure," the report read.

Korea and India are the only countries among the world's top 10 economies in terms of nominal GDP that had not been included in the bond index. India will join the FTSE Emerging Markets Government Bond Index starting in September 2025.

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]