South Korean asset management firms will be allowed to the central bank’s foreign reserves to invest in stocks in developed markets this year, the Bank of Korea said on Monday.

The BOK said it will receive applications from local asset managers that meet certain qualification requirements such as asset under management until Feb. 15, under its plan to open the doors to local asset managers as stock investors in overseas markets beyond foreign asset managers.

As of end of 2017, the BOK managed 80.9 percent of its foreign assets directly while 19.1 percent entrusted to foreign asset management institutions. Of total foreign assets, 84.6 percent was invested in bonds while stocks 8.6 percent, and 6.8 percent in deposits. So far, investment in advanced stock markets was entrusted to only foreign asset management firms.

The BOK, however, decided to entrust advanced market stock management to also local institutions given their enhanced capability compared to the past. The BOK did not disclose details of qualification requirements but noted that about 5 to 10 local asset managers already meet the requirements.

The BOK plans to complete a selection process by the end of March, which will allow local asset managers to invest in advanced market stocks in the first half of this year on behalf of the central bank. Total investment is expected to reach about $300 million.

The BOK, meanwhile, selected several local asset managers in 2012 and entrusted them with investment of yuan-denominated stocks. Last year, it also selected local brokerage firms for the first time to be involved in foreign currency bond trading. The BOK expected the latest decision to help boost the competitive edge of local asset management firms.

By Lee Yu-sup and Lee Eun-joo

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