TLDR:
- South Korea to join FTSE Russell’s World Government Bond Index (WGBI) in 2025
- India added to FTSE Russell’s emerging market debt index from 2025
- Korean inclusion expected to attract $56 billion in inflows
- India’s inclusion in emerging market bond index projected at 9.35% share
- Both countries commended for improving foreign investor access
FTSE Russell, a leading global index provider, has announced the inclusion of South Korean sovereign bonds in its World Government Bond Index (WGBI) and Indian government debt in its Emerging Market Bond Index, both set to take effect in 2025.
This decision comes after both countries implemented significant reforms to improve access for foreign investors in their respective bond markets.
South Korea’s inclusion in the WGBI is scheduled to begin in November 2025, with a projected weighting of 2.22% in the index.
The addition will be phased in on a quarterly basis over a one-year period. This move is expected to attract substantial foreign investment, with the South Korean finance ministry estimating inflows of around $56 billion (80 trillion won).
The South Korean government has been actively pursuing inclusion in the WGBI as part of broader reforms aimed at eliminating the so-called “Korea discount” and boosting foreign investment
. These efforts included extending trading hours for the won currency and facilitating easier trade settlements for overseas investors through Euroclear, an international securities settlement house.
Finance Minister Choi Sang-mok emphasized the significance of joining the WGBI, stating, “WGBI is the most selective club for advanced economies. Joining it shows how investors view the South Korean economy and markets.”
Meanwhile, India’s government bonds will be added to FTSE Russell’s Emerging Market Bond Index starting September 2025. The inclusion will occur over a six-month period, with India expected to ultimately represent a 9.35% share of the index, making it the second-largest component after China.
India’s inclusion comes after years of progress in improving market access for foreign investors. Nikki Stefanelli, FTSE Russell’s global head of FICC index policy, noted,
“We’ve seen progress been made over the past few years that we’ve tracked India. It’s really clear to us that it is part of the mainstream EM choice sets, becoming a more and more important part of those portfolios.”
The inclusion of both countries in these indexes is anticipated to have positive impacts on their respective financial markets.
For South Korea, experts predict a rally in medium-term bonds, with yields potentially declining by 10 to 20 basis points, and a strengthening of the won currency. India’s bond market has already seen significant inflows this year, with index-eligible bonds attracting approximately $14 billion.
These developments come at a time when Asian debt is gaining appeal due to falling yields in the US and Europe. When a country is added to a major benchmark like the WGBI, which tracks approximately $30 trillion in assets, global funds that follow the index typically need to purchase that country’s debt to maintain alignment with the benchmark.
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