The Korean stock market will be open to foreign investors from January 1992, a move to liberalize the stock market from it's earlier conditions of prohibiting stock trade with foreign investors with the exception of direct investment for companies and indirect investment such as country funds, earning securities and the issue of foreign securities for Korean companies. When foreign capital flows into the domestic market, the stock market will be active and domestic companies will increase direct capital fundraising activities such as the issuance of new stock. Such direct finance results in a drop in interest rate and the burden of capital costs. Thus, a stock market with a consolidated role is essential to the Korean economy.

However, it is worried that the inflow of capital will lead to a price increase due to inflation and speculative capital. The unresolved problems of transferring state and corporate shares hold the key to the further development of Korea's stock market.
This paper analyzes the effects of opening Korea's stock market then discusses countermeasures to cope with foreign investment.