South Korea moves to open ETF market to foreign investors

South Korea’s financial authorities are moving to allow foreign investors to directly trade domestic exchange-traded funds (ETFs), a step that could attract more overseas capital into Korean assets amid a record-breaking rally in the benchmark KOSPI index, sources said on Sunday, News.Az reports, citing Yonhap.

The KOSPI has been one of the world’s top-performing stock indices this year, rising 82% from 4,309.63 on the first trading day of the year to close at 7,847.71 on Friday.

The gains have been largely driven by strong performances from Samsung Electronics Co. and SK hynix Inc., boosted by the global artificial intelligence boom.

According to sources, the Financial Services Commission (FSC) is currently preparing revisions to investment business regulations that would allow foreign investors to directly access local ETFs. A prior notice for the proposed changes is expected to be issued next month.

An exchange-traded fund (ETF) is an investment product traded on stock exchanges that holds a basket of assets such as stocks, commodities, or bonds, typically tracking a specific index.

A financial authority official said that opening more access points for foreign investors would increase demand for South Korean assets and bring more US dollars into the country.

Last week, FSC Chairman Lee Eog-weon stated that the agency plans to soon revise rules to allow offshore retail investors to trade ETFs through omnibus accounts, enabling them to buy and sell local stocks without opening separate accounts with Korean brokerages.

Analysts said that if the FSC and the finance ministry agree on withholding tax issues, the measure could be implemented in the second half of the year after brokerage firms complete necessary system upgrades.

News.Az 

By Nijat Babayev