(Bloomberg) — South Korea will join FTSE Russell’s main global bond index next year, paving the way for tens of billions of dollars inflows after overhauling the country’s financial market infrastructure.
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Citing the government’s progress in improving market access, the index provider is including India in emerging market debt from 2025. Vietnamese stocks, meanwhile, were on the watch list for an upgrade to an emerging market, while Greek stocks were added to the list for inclusion as a developed market.
The announcement comes as lower yields in the US and Europe boost the appeal of Asian debt. When a new member is added, such as FTSE’s $30 trillion global government bond index, global funds that track the scale must buy that country’s debt.
Still, Seoul’s green light comes as a surprise after Morgan Stanley and Goldman Sachs Group Inc flagged the risk of delays due to the slow pace of reforms.
“This development is expected to have a positive impact on Korean financial markets,” said Kyong Cheong, lead Asia macro strategist at Société Générale SA. He sees medium-term bonds rallying, with yields falling 10 to 20 basis points and strengthening on the win.
There was little impact on India’s debt as the yield on the 10-year bond fell two basis points to 6.79%. Korea’s financial markets are closed for the holiday.
FTSE Russell praised both Korea and India for the measures taken to improve access to foreign investors. Officials in Seoul continued to aggressively add to the WGBI, extending trading hours for winners and making it easier for foreign investors to trade through Euroclear.
Access is expected to attract $56 billion in inflows, according to the Ministry of Finance in Seoul, with the new fund helping to manage government finances. For India, Mitsubishi UFJ Financial Group Inc. The figure has been put at $2 billion to $5 billion.
Korea’s weight in the WGBI is projected to be 2.22% in the one-year period from November 2025, after a gradual gain on a quarterly basis.
The Indian government, by contrast, kept a low public profile. While joining the flagship index can attract global funds, it can also pose risks to emerging economies, which are often hampered by capital outflows.
“The WGBI is a very select club for advanced economies,” Finance Minister Choi Sang-mok told a briefing in Seoul on Wednesday. Joining it shows “how investors view the South Korean economy and markets.”
Emerging market investors have held roughly the same disproportionate share of India’s debt and have pushed for its inclusion in the benchmarks.
India’s debt will be added to FTSE’s $4.7 trillion emerging market bond index next September with a closing stake of 9.35% over a six-month period. This would be the second highest after China.
“The last few years have seen us tracking India,” said Nicky Stefanelli, global head of FICC index policy at FTSE Russell. “Really, I think it’s clear to us that it’s part of the core EM selection package and is becoming an increasingly important part of those portfolios.”
Despite what was seen as a reform setback, India already had JPMorgan Chase & Co. in June. Joins the widely followed emerging market metric of .
India’s index-eligible bonds have attracted about $14 billion of inflows this year. It is set to join Bloomberg’s local currency government bond index in January.
Bloomberg LP is the parent company of Bloomberg Index Services Ltd., which manages indices that compete with other service providers.
–With assistance from Sherry Ahn, Heidi Lun, Ronojoy Majumdar, Jaehyun Eum, Greg Ritchie, Joanna Osinger, Maria Elena Vizcaino, Yukyung Lee, and Ezra Feiser.
(Adds Finance Minister’s opinion in eleventh paragraph)
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