Korea tests global investor appetite with longer trading hours

South Korea’s Korea Exchange is extending trading hours into the evenings, deviating from the traditional Asian trading norms in a bid to attract global investors. This move, set to commence on Monday, will allow trading of nearly all local stocks until 8pm, following the regular close at 3.30pm. This step, while the first of its kind among major Asian exchanges, aligns with the global trend towards round-the-clock markets, pioneered by Nasdaq Inc and the New York Stock Exchange.

The extension aims to harness sustained demand from international investors, particularly during European business hours, after the stock market’s impressive run this year fueled by enthusiasm for AI.

Young Jae Lee, a senior investment manager at Pictet Asset Management in London, highlights that the longer trading window offers investors more flexibility, enhancing market efficiency. He further notes that investors inclined towards frequent trading or hedging may find the extended hours more appealing. While after-hours trading is not novel in Korea, with Nextrade introducing pre-market and evening sessions in March 2025, covering about 600 stocks, Korea Exchange's move is more expansive, covering approximately 2,400 Kospi and Kosdaq stocks for evening trades, including short-selling.

However, the immediate impact of this change is uncertain. Despite Korea's foreign exchange market technically operating 24 hours, off-peak trading can be thin, potentially leading to higher costs and discouraging large trades. Liquidity remains a major concern, as moving a significant chunk of shares during the evening could result in unfavorable prices due to low liquidity.

Information asymmetry is another issue, where the uneven distribution of information could affect market fairness. Despite these challenges, market observers generally support the extension, arguing it promotes a more equal playing field by allowing investors to react to post-close news promptly.