South Korea's central bank has decided to entrust local asset management firms with investment of its foreign reserves into advanced market stocks this year.
The Bank of Korea (BOK) announced on Jan. 21 that it will receive applications from local asset managers that meet certain qualification requirements until Feb. 15. The total investment is expected to reach about US$300 million (339.15 billion won).
The BOK managed 80.9 percent of its foreign assets directly while entrusting the remaining 19.1 percent to foreign asset management institutions as of the end of 2017. Of the total foreign assets, 84.6 percent was invested in bonds while 8.6 percent in stocks and another 6.8 percent in deposits.
Until now, only foreign asset management firms have been assigned by the BOK to invest in stocks of developed markets. The BOK, however, decided to entrust advanced market stock management to local institutions as well given their enhanced capability compared to the past. It plans to complete a selection process by the end of March, which will allow local asset managers to invest in advanced market stocks in the first half of this year.
The BOK selected several local asset managers in 2012 and entrusted them with investment of yuan-denominated stocks. It also selected local brokerage firms for the first time for foreign currency bond trading last year, gradually expanding participation of the domestic investment banking industry in management of its assets.