Abolish the 30-year-old foreign investor registration system…
Image = KB Securities
The financial authorities have decided to abolish the foreign investor registration system, which has been maintained for over 30 years and has been identified as one of the main factors in the ‘undervaluation of the Korean stock market’ (Korea decline). Regarding this, the stock market expressed the opinion that the key is to raise expectations for inclusion in the higher MSCI index on the surface, but in detail, attention should also be drawn to the possibility of important changes in the business of securities companies.
On the 25th, Ha In-hwan, a researcher at KB Securities, said, “The policy direction that the monetary authorities recently presented at the ‘Policy Seminar to Resolve Korea’s Deflation’ was ultimately a process to be incorporated into a higher index MSCI, and with the announcement of the abolition of the foreign investor registration system this time, the process is in full swing. “It is a matter of course, but as the related efforts go to the limit, the expectations for foreign capital inflows are expected to expand,” he said.
In fact, foreign net buying is evident in supply and demand this year. According to the Korea Exchange, foreigners bought 4.2757 trillion won in the stock market for 15 trading days from the 2nd to the 20th. During the same period, individuals and institutions sold 3.9735 trillion won and won 351.5 billion, which is the opposite.
Citing estimates from the Korea Economic Research Institute, researcher Ha predicted that the scale of foreign capital inflow due to MSCI’s inclusion in the advanced index would reach 18 to 61 trillion won.
However, this is the result of a positive scenario, and you need to consider the case where things did not work out the way you wanted. This is the risk faced if the index is not promoted to a higher index. Researcher Ha said, “The weighting of Korea in the MSCI Emerging Index has declined over the long term, and one of the reasons is because the weighting of China has increased significantly. Another risk could emerge in the future, and India’s weighting continues to widen. If it is not promoted to MSCI’s senior index, it is very likely to face further weight loss.”
Regarding the abolition of the foreign investor registration system, researcher Ha said that it is necessary to closely examine not only the direct investment perspective but also the policy and business aspects in the future. It is explained that the issue of the resumption of short selling, which is the biggest remaining issue, is very likely to emerge, and in the long term, there is a high possibility that important changes will occur in the business of securities companies to settle a series . of policies.
He said, “Most of the problems highlighted by MSCI for Korea have been addressed and will continue to be addressed through the ‘Policy Seminar to Resolve Korea’s Decline’ and the ‘Foreign Exchange Market Development Plan’. What remains now is a ‘full’ short selling resume.” “From the point when the stock market stabilises, we need to consider the possibility that the issue of ‘full resumption of short selling’ will emerge,” he said.
“In addition, the role of securities companies will be important in the long term for these policies to settle down,” he said. It’s time to consider it.”
Shin Min-kyung, Hankyung.com reporter radio@hankyung.com
After 30 years… Abolish the foreign investor registration system
‘Old regulation’ foreign investor registration system to be abolished after 30 years
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