To Facilitate Foreign Investment in Korean Stocks
The Financial Services Commission has decided to repeal the mandatory foreign investor registration introduced in 1992.
“The South Korean stock market is currently the only major stock market where foreign investor registration is mandatory,” it said, adding, “The registration will be replaced with individual passport numbers and legal entity identifiers so that foreign investors can more easily invest in the market.”
This year, MSCI refused to include the South Korean stock market in its World Index. The reasons mentioned by MSCI are a shortage of English information, the foreign investor registration, and dividend fixed after ex-dividend date. Global investment banks have also mentioned these as capital market regulations that need to be redressed. The dividend-related regulations are planned to be changed as well.
Another part to be changed is the omnibus account introduced in 2016. It is to facilitate foreigners’ securities transactions by allowing a global asset management firm to group funds into one account and order and settle with it. The account opening history is zero as investment reporting on settlement date is mandatory. The mandatory reporting to the authorities is planned to be replaced with securities companies keeping data so that the financial and taxation authorities can check it later if necessary.
At the same time, the government is planning to make listed companies’ English disclosures mandatory in stages and gradually. “It seems that the government will retry for the MSCI World Index,” said an expert, adding that foreign investment in the South Korean stock market is estimated to increase by US$55 billion after it becomes a part of the index.