On May 29, the Ministry of Economy and Finance held the seventh meeting of the "WGBI Regular Monitoring and Investment Promotion Task Force" at the Government Seoul Complex, chaired by Hwang Soon-kwan, head of the National Treasury. The task force, which includes representatives from the Ministry of Finance, Financial Services Commission, Bank of Korea, Financial Supervisory Service, and Korea Securities Depository, discussed trends in foreign capital inflows since the WGBI inclusion began.
The WGBI is a major index for advanced bonds managed by the UK-based Financial Times Stock Exchange (FTSE) Russell. It is considered the largest bond index globally due to its stringent criteria, which include government bond issuance balance, credit ratings, and market accessibility.
South Korea was confirmed for WGBI inclusion in April of last year, with the process starting last month and set to continue in phases until November.
According to the Ministry of Finance, net foreign purchases of Korean government bonds since the WGBI inclusion began are 22.7 trillion won based on transaction standards (from March 30 to May 27) and 18 trillion won based on settlement standards (from April 1 to May 27). Despite increased market volatility due to external factors such as the recent Middle East conflict and tightening monetary policies in major economies, foreign net purchases have continued in both April and May.
Notably, the inclusion in the WGBI has attracted new investors, including Japanese investors, who accounted for 6 trillion won based on settlement standards. Consequently, net foreign purchases of Korean government bonds from January to May reached 36.3 trillion won, an increase from 32.8 trillion won during the same period last year. Additionally, investments from pension funds and central banks, which tend to hold assets long-term, have made up a significant portion of this total.
The government plans to regularly monitor the inflow of foreign capital through the task force and continue holding investment briefings for foreign investors.
Hwang Soon-kwan, head of the National Treasury, stated, "In April and May, foreign capital has flowed in at a significant scale. The influx of new investors, including those from Japan, will contribute to expanding the investor base and stabilizing the market in the medium to long term." He added, "Given the recent volatility in government bond rates, we must remain vigilant in June and closely monitor foreign capital inflow trends. Despite the challenging market conditions, we should strive to enhance foreign investment in our bond market through various efforts."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.