South Korea’s central bank said Monday that it will entrust local asset management firms with investment of its foreign reserves into advanced market stocks this year.
The Bank of Korea held more than $400 billion worth of foreign reserves in 2018, consisting of securities and deposits denominated in overseas currencies, as well as International Monetary Fund reserve positions, special drawing rights and gold bullion.
As of end-2017, the BOK manages 80.9 percent of its foreign assets directly, with the rest held in trust.
Out of the total, 8.6 percent was invested in stocks, while 84.6 percent was in bonds.
So far, only foreign asset management firms have been assigned by the BOK to invest in stocks of developed markets, including the United States, Europe and Japan. Local firms are allowed to manage investment of Chinese stocks.
Before the end of the first half, the central bank said it will open the market to South Korean asset managers. It has set aside $300 million for them.
“The capacity of local asset management firms has improved significantly. They are sufficiently experienced to manage foreign reserves put in trust,” the BOK said.