Korea’s inclusion in FTSE WGBI expected to attract over $55 billion in investment

Korea will be added to the World Government Bond Index (WGBI) effective from November 2025. The influx of major foreign funds tracking the index to Korea is expected to bring down interest rates of government-issued bonds, lowering financing costs for the government and companies.

FTSE Russell, which produces markets stock market indices, announced on Tuesday (local time) that it had decided to add Korea to the WGBI through its semi-annual review of bond country classification. Korea will be incorporated in the index from November next year after a grace period, with its proportion to gradually increase over one year.

WGBI estimated that funds following Korean indices exceed $2.5 trillion. Given Korea's inclusion rate of 2.22%, more than $55 billion is expected to flow into the Korean government bond market from next year.

The Korea Institute of Finance reported last year that government bond interest rates would be lowered by 0.2 to 0.6 percentage points due to WGBI inclusion. “We expect that the change will help stabilize interest rates, reducing financing costs for individuals and companies, enabling stable mid- to long-term financial management,” said Deputy Prime Minister and Minister of Strategy and Finance Choi Sang-mok.


Do-Hyong Kim dodo@donga.com