South Korea bonds not yet added to WGBI in FTSE Russell index review

(Reuters) -South Korea, India, and Switzerland will remain on watch lists for possible country reclassification and inclusion in key government bond indexes, FTSE Russell said on Thursday.

India and Switzerland have been on watch since 2021 for possible inclusion in the FTSE Emerging Markets Government Bond Index (EMGBI) and World Government Bond Index (WGBI) respectively, while South Korea was added to the WGBI watch list in September 2022, FTSE Russell said.

South Korea’s finance ministry pledged its utmost to ensure its bonds are added to the WGBI this year, saying in a statement it would swiftly implement market reform plans.

Last week, Barclays said it expected South Korean bonds to join the WGBI and estimated some $60 billion in passive flows over several quarters.

The yield on the 10-year South Korean government bond stands at 3.303%, 43 basis points below the close of 2022. It touched an intraday 2023 low of 3.128% in early February.

Korea is already included in other major bond indexes like the Bloomberg Global Aggregate Index and JPMorgan’s GBI-DM Broad Index.

On equities, Vietnam will remain on watch for possible reclassification as Secondary Emerging market from its current Frontier Market status, FTSE Russell said.

Nigeria was being reviewed to ‘unclassified market’ due to delays in capital repatriation. The relevant criteria was downgraded to ‘not met’ from ‘restricted’, but no reclassification was announced and it remains a Frontier Market.

Iceland’s final tranche of the reclassification as Secondary Emerging market was effective as of March 20.

Mongolia will notch Frontier Market status effective September, FTSE Russell said.

(Reporting by Rodrigo Campos; Additional reporting by Choonsik Yoo in SEOUL;Editing by Chris Reese and Deepa Babington)