Foreign Investor Interest Grows Following Korea's Inclusion in WGBI for Government Bonds
The Korea Securities Depository's integrated government bond account, established in collaboration with the International Central Securities Depository (ICSD), has surpassed a custody balance of 1 trillion won just three months after its launch. The transaction amount through the integrated government bond account has also exceeded a cumulative 7.5 trillion won.
Lee Sun-ho, President of the Korea Securities Depository (from the left), Yoo Jung-hyun, Ambassador and Permanent Representative to NATO at the Embassy of the Republic of Korea to Belgium and the European Union, and Peter Sneyers, CEO of Euroclear, are posing for a commemorative photo. (Provided by Korea Securities Depository)
According to the Depository on the 17th, the custody balance of the integrated government bond account increased from 21 billion won in July to 542.5 billion won in September, and as of the 14th of this month, it stands at 1.0625 trillion won. The transaction amount through the integrated government bond account has also rapidly increased, surpassing a cumulative 7.5 trillion won.
The integrated government bond account is an account opened by the ICSD at the Korea Securities Depository, the only electronic registration institution in Korea, for foreign investors. With the establishment of a government bond support system for Korean government bond investment, foreign investors now have a more convenient and stable way to invest in the Korean government bond market than before.
The news on the 8th that Korean government bonds were included in the World Government Bond Index (WGBI) served as a catalyst for foreign investors to take greater interest in the Korean government bond market. The fact that the custody balance nearly doubled in October compared to September reflects this increased interest from foreign investors.
Since starting the construction of the integrated government bond account in December 2022, the Depository has been developing a cross-border government bond trading system, supporting policy authorities in institutional improvements, and conducting overseas promotion (IR).
Through more than 180 working-level meetings with the ICSD, the Depository enhanced the system's completeness and acted as a bridge to convey various opinions of foreign investors to policy authorities.
Additionally, the Depository directly met with 109 global investment institutions in Japan, London, Singapore, Hong Kong, and other locations to explain the integrated government bond account system and encourage its use.
Lee Soon-ho, President of the Korea Securities Depository, also took the lead in ensuring the smooth launch and promotion of the integrated government bond account system. In August last year, President Lee visited the ICSD headquarters in Brussels and Luxembourg to sign contracts for the construction and operation of the integrated government bond account, laying the foundation for its launch. In May, he held direct negotiations with Euroclear executives to officially confirm the opening date of the integrated government bond account as June 27, resolving uncertainties related to its launch.
Going forward, the Depository plans to support the preparation for the inclusion of Korean government bonds in the World Government Bond Index starting November next year without any setbacks.
In particular, it plans to extend the settlement processing deadline for foreign investors' government bond transactions by three hours (from 10 a.m. to 1 p.m.) to provide additional time for settlement payment currency exchange and settlement instruction.
Along with this, the Depository will continue investor relations (IR) activities to listen to foreign investors' opinions in the changed environment following the decision to include Korean government bonds in the World Government Bond Index (WGBI).
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