Opening of Integrated Accounts for Foreign Investors Seen as Positive for MSCI Market Accessibility Assessment

Financial Services Commission to Open Market from 2026
Foreign Investors to Trade Korean Stocks via Local Securities Firms
Expectations for Increased Buying... IT and Financial Sectors Poised to Benefit

On the 3rd, various indicators such as the KOSPI index and the won-dollar exchange rate were displayed in the dealing room of Shinhan Bank's headquarters in Jung-gu, Seoul.

Foreign investors will now be able to trade Korean stocks through accounts at their local securities firms. Analysts say this move increases the likelihood of Korea being included in the developed markets index, as it is expected to receive higher marks in next year's Morgan Stanley Capital International (MSCI) market accessibility assessment.

On December 4, Korea Investment & Securities provided this analysis. On November 27, the Financial Services Commission distributed guidelines for the use of integrated accounts for foreign investors and announced the removal of restrictions on who can open such accounts starting next year. Previously, foreign investors had to individually open accounts at domestic securities firms to trade Korean stocks. With this new measure, they will be able to trade directly through their local securities firms.

This measure is viewed positively for next year's MSCI market accessibility assessment. MSCI has long cited limited market accessibility as a key reason for Korea's exclusion from the developed markets index. Opening up integrated accounts for foreign investors is expected to directly address the complexity of foreign investment and account structures, and is seen as a structural change that meets the requirements for developed market inclusion.

However, challenges such as opening the foreign exchange market for 24-hour trading still remain. Nevertheless, analysts expect that improvements in areas such as foreign investor registration, clearing, and settlement will accelerate Korea's inclusion on the developed market watchlist in the MSCI market accessibility review.

With the implementation of integrated accounts for foreign investors, there is a possibility that net purchases by foreign investors will increase. It is expected that transaction-based capital inflows will rise. When integrated accounts for foreign investors were first introduced in 2017, capital from the United States and Europe flowed in, leading to an increase in foreign ownership and a noticeable trend of net buying by foreign investors.

Korea Investment & Securities identified IT and financial sectors as the main beneficiaries of these regulatory changes. Shin Chaerim, a researcher at Korea Investment & Securities, explained, "There is a high possibility that foreign capital will flow into highly liquid large-cap semiconductor stocks and financial stocks, which have the second highest proportion of foreign ownership. Foreign investors tend to trade more actively in sectors with low price-to-book ratios (PBR), and increased demand for clearing and settlement systems is likely to make the securities industry more attractive."

This content was produced with the assistance of AI translation services.