Deputy Prime Minister Jin Nyum said yesterday that ETFs will be introduced by early next year to expand the long-term and stable demand base for the stock market. The introduction of ETFs is aimed at boosting the financial markets. ETFs are a kind of index fund, which track the market index. Unlike currently available index funds, ETFs can be listed and traded on the stock market. ETFs are usually not traded at a discount, thus keeping the prices at which investors trade roughly in line with the net asset values of their underlying portfolios.
Investors also benefit from risk-diversification.
According to Mirae Asset Investment and Trust, the daily turnover of ETFs on the American Stock Exchange accounts for 50 percent of the total trading volume. And Taiwan, Hong Kong and Singapore have already traded ETFs in a bid to boost the stock market. Japan also introduced the funds this year. In a move to strengthen the competitiveness of domestic financial institutions, the government will embark on wide-scale deregulation in the financial market. Jin said regulations lowering the competitiveness of financial institutions, or erecting barriers for financial institutions to enter into other business turfs would be scrapsped.