Korea reiterates reform plans to join MSCI developed markets

South Korea’s Finance Minister Hong Nam-ki reiterated the country will take reform measures such as the extension of the local currency's trading hours to reach MSCI Inc.’s developed market status for its stock markets.

During a meeting with MSCI officials such as Managing Director-Global Head of Index Management Craig Feldman on April 22 in New York, Hong requested that the index provider place the country’s stock market on the watch list for an upgrade during its June review.

“We will consider improving the system to alleviate inconveniences for foreign investors, regarding issues such as the foreign investor registration rule and the right to use the (local) index,” Hong said. MSCI has requested to use the Kospi to list derivatives tracking the country’s main index on foreign stock markets.

Currently, foreigners, who plan to invest in domestic stocks, must first register their personal information with the Financial Supervisory Service.

LONGER FX TRADING HOURS

The government plans to expand the operating hours of the local currency market and consider allowing offshore investors to directly trade the won currency.

Currently, the Seoul foreign exchange market opens at 9 a.m. local time (00:00 GMT) and closes at 3:30 p.m. The government is mulling an extension of the closing time to 6 p.m. or 1 a.m. the following day and is even considering 24-hour operations. The expansion is expected to allow investors in major global financial markets such as London to participate in South Korea’s foreign exchange market.

The country unveiled those reform measures in January as an upgrade to MSCI developed market status is expected to attract more foreign investors, especially global pension funds.

MSCI, which has been classifying South Korea’s stock market as an emerging market for years, said the country needs to improve its foreign exchange market to earn developed market status. MSCI was known to have also required a reform of the foreign investor registration rule and expansion of short-selling for an upgrade.

Write to Jung-hwan Hwang at jung@hankyung.com
Jongwoo Cheon edited this article.