Korea moves to allow foreigners to trade ETFs directly

A screen in Hana Bank’s trading room in central Seoul shows the Kospi closing at 7,847.71 points on May 22, up 32.12 points, or 0.41 percent, from the previous trading session. [YONHAP]

 

Korea’s financial authorities are moving to allow foreign investors to trade domestic exchange-traded funds (ETFs) directly, a measure that could help draw more overseas money into Korean assets amid a record-setting rally in the benchmark Kospi, sources said Sunday.

 

The Kospi has been among the world’s best-performing stock indexes this year, rising 82 percent from 4,309.63 on the first trading day of the year to close at 7,847.71 on Friday, driven largely by strong gains in Samsung Electronics and SK hynix amid the global AI boom.

 


According to the sources, the Financial Services Commission (FSC) is currently seeking revisions to investment business regulations to allow foreigners to invest directly in local ETFs and plans to issue a prior notice next month.

 

“If we open more doors for foreigners to enter the Korean financial market, demand for Korean assets will rise, bringing more U.S. dollars into the country,” a financial authority official said.

 

Last week, FSC Chairman Lee Eog-weon said his agency will soon revise regulations to allow offshore retail investors to buy and sell ETFs through omnibus accounts, which allow them to trade local stocks without opening separate accounts with Korean brokerages.

 

Analysts said that if the FSC and the Ministry of Finance and Economy reach an agreement on withholding tax issues, the measure could be introduced in the second half of the year after brokerages overhaul their trading systems.

Yonhap