India, South Korea to Join FTSE Russell’s Bond Indices in 2025

After a two-year long wait, South Korea will now be included in a key global government bond index run by FTSE Russell, starting in November next year, the London-based organisation said on Tuesday.

FTSE Russel also announced that Indian government bonds will be admitted into its Emerging Markets Government Bond Index (EMGBI) effective from September 2025 after a three-year wait. FTSE Russell is a subsidiary of London Stock Exchange Group that produces, maintains, licenses, and markets stock market indices.

This decision reflects the continued progress in the accessibility of the market for these securities for international investors and the growing importance of the Indian government bond market in mainstream global emerging markets bond portfolios.

South Korea and India are the only countries among the world’s top 10 economies in terms of nominal gross domestic product that have not been included in the bond index. FTSE Russell is a subsidiary of the London Stock Exchange Group that produces, licenses and markets stock market indices.

These two announcements will help the respective countries to unlock billions of foreign investments. The Market Accessibility Level for India will be reclassified from 0 to 1, and its bonds will be included in the EMGBI.

FTSE said that several initiatives intended to improve the accessibility of South Korean government bonds for international investors have been implemented by South Korean market authorities, which have facilitated the fulfilment of the criteria for a Market Accessibility Level of 2.

South Korean government bonds would represent 2.22% of the index on a market value-weighted basis and would be included in the WGBI, while Indian securities will be a part of FTSE’s EMGBI after being on the index provider’s watch list for the last three years. It would represent 9.35% of the index on a market-value weighted basis, FTSE said.

With a market value of $29 trillion, the WGBI is a highly sought-after benchmark that would attract substantial capital inflows from global investors. South Korea is expected to attract as much as $67 billion of foreign investment through the inclusion, officials and experts have said.

S Korea’s Market Reforms

FTSE Russell noted that a set of market reform measures by the South Korean government as positive developments, including the extension of trading hours of the local currency, allowing third-party foreign exchange and the establishment of a settlement system with Euroclear Bank and Clearstream to improve access by foreign investors to its government bond market.

FTSE Russell also congratulated the South Korean Ministry of Economy and Finance on its efforts to expand and encourage global investment in its local government bond market by implementing changes that have met the rigorous criteria for WGBI inclusion, as well as its ongoing commitment to addressing the practical feedback of international bond investors participating in its evolved market structure.

South Korea’s Finance Minister Choi Sang-mok said the decision indicates that the global financial market has highly evaluated the South Korean economy’s solid fundamentals and vibrancy, along with its fiscal soundness.

He also said that South Korea will continue to review and revamp related policies while expanding communication with global investors, ensuring that Asia’s No. 4 economy can be stably included in the WGBI.