How to Invest in the Korean Stock Market

A stomping ground for options traders, the Korean stock market is the world's largest derivatives market in terms of volume. The Korea Exchange also lists stocks, bonds and other securities products offered by Korean, as well as a handful of international, companies.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Financial adviser (recommended)
• Capital to invest
• Properly licensed stockbroker

1. Learn which industries are the backbones of the Korean economy. Traditionally, manufacturing and product assembly have been Korea's bread and butter. In addition, watch for political developments in the region, since the South Korea-North Korea divide can make for an unstable political situation that often affects the Korean stock exchange.
2. Follow the Korea Exchange closely for a period of weeks before you decide where you want to invest your money. The Seoul-based Korea Exchange is South Korea's primary stock market.
3. Choose a financial adviser with ties to Korea or specialized knowledge of the Korean economy.
4. Check to see which brokerage firms have access to the Korean stock exchange. Though foreign investment in the Korean stock exchange can generally take place without obstacle, it is necessary for your order to be finalized by a licensed Korean stockbroker. Thus, your brokerage will have to forward your request to a licensed third party in Korea, and this may affect your commission fees.
5. Open an account with a brokerage that offers access to the Korean markets. Make an initial deposit into the account, taking care to have your back covered in case you lose your shirt.
6. Exercise the same caution and diligence you would if you were going to invest in a domestic stock. This means you'll want to check into the stock's trading history and gain access to the company's financial statements. However, remember that these documents may not be available in English and could also come with a price tag.
7. Choose a stock you believe will rise in value, based on your analysis of the Korean stock market and in cooperation with your financial adviser.
8. Place a buy order of the Korean stock you want to buy through your brokerage account. Expect that you may be subject to a delay while your request is routed through a licensed Korean stockbroker.
9. Follow your investment directly on the Korea Exchange's official website (see Resources below). You can display the site in English by clicking on the "English" tab on the Korean homepage.

Tips & Warnings

• Invest in the South Korean exchange. North Korean financial markets are not open to foreign investors.