Foreigners increasingly join Korea’s alternative stock exchange

Nextrade headquarters in Yeouido, Seoul / Yonhap

An increasing number of foreign investors have been using Nextrade, Korea’s newly launched alternative trading system (ATS), over the past three months, buoyed by reduced internal and external uncertainties since April, data showed Sunday.

The positive development followed an April inflow of offshore investor funds that net purchased large-cap KOSPI shares for the first time in 10 months.

Many say more foreign funds will find their way into the long-undervalued equity market this year, especially since many foreign brokerages are seeking to join the platform.

Still, challenges remain. Institutional investor enthusiasm remains poor thanks to questions of system stability, including order malfunctions that led to outright service trading halts.

A new order mechanism on Nextrade had an error, leading to the government-mandated system halt. Users of Kiwoom, Mirae Asset, Meritz and Toss experienced major inconveniences.

According to Nextrade, foreign investors accounted for 8.9 percent of total trading volume during the first week of June.

This was a sharp increase from 0.4 percent in March, when the system was launched.

The figure is a further uptick from between 7 and 8 percent in May, a considerable rise from between 1 and 6 percent in April.

For context, offshore investors constitute over 30 percent of the Korea Exchange (KRX).

Investors have been giving positive feedback for Nextrade’s pre-market trading service, which allows investors to make an investment choice before the day's regular session opens, factoring in overnight news from the U.S., such as tariff policy developments or tech share movements.