Seoul: South Korea's inclusion in a significant global government bond index managed by FTSE Russell has been delayed from November 2025 to April 2026, the Seoul government announced Wednesday. The delay affects the country's integration into the World Government Bond Index (WGBI), which is now expected to be completed by November 2026.
According to Yonhap News Agency, the finance ministry released a press statement citing FTSE Russell's latest review report. The report stated that, based on feedback from index stakeholders, FTSE Russell has outlined a refined technical inclusion approach. The inclusion will be phased in over a shorter eight-month period, divided into eight equal monthly tranches, starting with April 2026 index profiles and concluding with November 2026 index profiles.
Kim Jae-hwan, a senior official at the finance ministry, commented that if the delay had been due to political uncertainty or bond market issues, FTSE Russell might have considered different alternatives, such as postponing the final inclusion date. He emphasized that political uncertainty did not impact the inclusion timing, referencing former President Yoon Suk Yeol's brief imposition of martial law in December and subsequent impeachment.
FTSE Russell stated that the refinement of the inclusion approach is due to several factors, including feedback suggesting that monthly tranches, rather than quarterly ones, would provide ease and simplicity for portfolio managers. Recently, South Korea has faced political instability and rising trade frictions due to tariff measures imposed by U.S. President Donald Trump's administration, affecting the country's export-dependent economy.
The London-based index provider acknowledged "continued strong support" for South Korea's inclusion from market participants and praised the efforts of South Korean market authorities and infrastructure providers to ensure a seamless integration into the index. FTSE Russell announced South Korea's inclusion in the WGBI last October.
The Seoul government has estimated that this move could attract up to 80 trillion won (US$54 billion) to the domestic bond market, addressing the long-standing "Korea discount" issue in both the bond and foreign exchange markets. The Korea discount refers to the persistent undervaluation of South Korean companies compared with their global counterparts, often attributed to low dividend payouts and the dominance of chaebol, or family-run conglomerates.