Korea’s government bonds enter FTSE World Government Bond Index

An employee at Hana Bank’s counterfeit response center in central Seoul examines dollars bills on March 5. [YONHAP]

 

Korea’s government bonds entered the FTSE World Government Bond Index (WBGI) on Wednesday. The index, compiled by FTSE Russell, is widely used as a benchmark by major institutional investors, including pension funds.

 

The inclusion is expected to bring in $50 billion to $60 billion in passive funds, which are seen as a crucial element in stabilizing the persistently weak won against the dollar, into the government bond market. The funds will be phased in through November.

 

“Foreign financial institutions and primary dealers of Korean Treasury bonds expect new inflows of around $50 billion to $60 billion with the WGBI inclusion, and funds have actually been confirmed to be flowing in this week,” said Finance Minister Koo Yun-cheol on Wednesday. “It is expected to contribute to stabilizing our foreign exchange and financial markets, which have become more volatile due to the Middle East conflict.”

 

BY JIN MIN-JI [jin.minji@joongang.co.kr]