Seoul: South Korea's financial authorities are taking steps to enable foreign investors to directly trade domestic exchange-traded funds (ETFs). This initiative aims to attract more overseas investment into Korean assets amidst a significant rally in the benchmark KOSPI, as reported by sources on Sunday.

According to Yonhap News Agency, the KOSPI has experienced an 82 percent increase this year, rising from 4,309.63 on the year's first trading day to a closing of 7,847.71 on Friday. This growth has largely been driven by substantial gains in Samsung Electronics Co. and SK hynix Inc., as part of the global surge in artificial intelligence.

The Financial Services Commission (FSC) is reportedly pursuing changes to investment business regulations to permit foreigners to invest directly in local ETFs. A prior notice regarding these changes is expected to be issued next month.

An ETF is a stock exchange-traded investment fund that includes a variety of stocks, commodities, and bonds, and follows an index. A financial authority official noted that opening more opportunities for foreigners in the South Korean financial market could increase demand for South Korean assets, subsequently bringing more U.S. dollars into the country.

FSC Chairman Lee Eog-weon stated last week that his agency plans to revise regulations to allow offshore retail investors to engage in ETF trading through omnibus accounts. These accounts would enable investors to trade local stocks without requiring separate accounts with Korean brokerages.

Analysts suggest that if the FSC and the finance ministry can resolve withholding tax issues, this measure could be implemented in the latter half of the year, contingent upon brokerages updating their trading systems.