Entry into MSCI ACWI
The Korean government is looking to bring in omnibus accounts for foreign investors in a bid to have the Korean stock exchange included in the Morgan Stanley Capital International Index All Country World Index Free (MSCI ACWI). Its plan is to join the watch list in June this year and the index next year.
On Jan. 7, the Financial Services Commission held its first meeting regarding the omnibus account. The commission is planning to keep changing Korea’s systems related to investment by foreign investors in order to introduce the account. In addition, the government is going to explain about the introduction of the account to MSCI personnel visiting Korea this month and ask for their cooperation with regard to the procedure of the incorporation.
The omnibus account is characterized by allowing each foreign investor to become free from the hassle of ID re-registration for investment in different funds. “The entire system modification process takes about six months,” the government explained, adding, “We are checking other measures concerning system modification as well because we also need to listen to the opinions of foreign asset management firms staying in Korea for on-site inspection.”
The introduction of the omnibus account is because the flow of foreign capital is likely to pose significant challenges this year as it did last year. In particular, unexpected situations are likely to follow if China A is incorporated into the MSCI Emerging Markets Index.