Interactive Brokers (IBKR), a global online brokerage, welcomed the Korea Exchange's launch of after-hours trading on the 14th as a positive change that improves foreign investors' access to the South Korean stock market. It criticized, however, the decision to exclude exchange-traded funds (ETFs) from the extended trading hours, saying the move could narrow investors' options.
David Friedland, head of Asia-Pacific at IBKR, said in an interview with The Seoul Economic Daily on the 16th that "there is strong trading demand even during off-market hours, so longer trading hours will also improve liquidity," adding that "global markets are also moving toward extending trading hours." He cited as another advantage that foreign investors can respond more quickly to Korean stocks when major events occur overseas.
IBKR is a Nasdaq-listed global online brokerage that provides brokerage services not only to retail investors but also to institutional clients such as hedge funds and financial advisory firms. In Korea, it launched a Korean stock trading service in May using an omnibus account for foreign investors in partnership with Samsung Securities, and it recently expanded cooperation with Daol Investment & Securities.
On the exclusion of ETFs from the extended session, Friedland said "I don't think it's a good idea," noting that "ordinary ETFs should also be included so that investors can make a wider range of choices." IBKR clients' most actively traded Korean securities include not only large-cap stocks but also leveraged ETFs and ETFs tracking the Standard & Poor's 500, indicating relatively strong demand for ETFs. With ETFs left out of the extended session, he said, the choices available to investors who had expected longer trading hours have been limited.
He said foreign investor interest in Korean stocks has exceeded expectations. "When we started trading Korean stocks in May, we notified only two clients that the service had launched, and from the very next day thousands of people began trading," Friedland said. He added that a growing number of retail clients are looking for undervalued Korean stocks, not just large caps such as Samsung Electronics and SK hynix.
He also described regulatory changes — the abolition of the foreign investor registration system, the introduction of omnibus accounts and the push to shorten the settlement cycle to T+1 — as steps that bring the Korean market closer to global standards. Still, he said further improvement is needed on issues such as difficulties conducting short selling through omnibus accounts and the abnormal-trading alerts that are triggered when orders from many investors are aggregated in a single account.
On share buybacks by Samsung Electronics and SK hynix, he was skeptical, saying "I have never understood why they do it" and that "it feels a bit like a 'show.'" He added that buybacks can still be read as a signal of a company's confidence in its own stock.
Responding to claims that single-stock leveraged ETFs have recently amplified stock market volatility, he pushed back, saying "it is not the fault of leveraged ETFs." Pointing instead to investors crowding into particular "hot products" and to FOMO, or the fear of missing out, as bigger factors, he stressed that "rather than restricting the products themselves, it is important to educate investors so they understand leverage, corporate fundamentals and investment risk."
Despite net selling by foreign investors and market volatility, he said the Korean market remains positive over the long term. "The fact that the KOSPI has recently gone through a correction does not mean there has been a major change in fundamentals," Friedland said. "Beyond Samsung Electronics and SK hynix, there are Korean companies with global influence such as K-culture and K-beauty, so the fundamentals remain solid."
