Korea’s state-run Korea Exchange would perform better if it were privatized once again and went public, according to the chief of the Japanese stock operator.

“I think for the sake of South Korea’s economy, its stock market should be operated privately,” said Atsuchi Saito, CEO of Japan Exchange Group, in a press conference on Thursday.

The Japanese CEO attended the general assembly and annual meeting of the World Federation of Exchanges, an event hosted by KRX and held at Grand Hyatt Seoul from Monday to Wednesday this week.

Saito claims that only in a free, unregulated environment may a market’s stock indexes serve as a valid economic indicator.

“Once privatized, the stock market would move in step with the nation’s economic policies, directly reflecting them and their objectives and consequences,” Saito said. “It would then help the government notice sudden changes in the economic flow and detect possible flaws in its policy decisions.”

He also noted that most of the stock exchanges in developed countries have gone public, adding that it would be natural for Korea to follow such a global trend.

The JRX went public in 2013, after it was formed by the merger of Tokyo Stock Exchange and Osaka Securities Exchange.

“After the merger and a subsequent initial public offering, we have seen a visible increase in the inflow of foreign investment, which led to an overall improvement in our profit,” Saito said.

The attraction of foreign investment will be all the more important once a pilot program linking the stock markets in Shanghai and Hong Kong takes effect within the year, he added.

“China’s plan is to use Hong Kong as a financial gateway, and this strategy would be beneficial for not only China but also for all of Asia, including Korea and Japan,” he said.

“The stock connect means that international money will flow more freely into China, and this money will eventually flow out of China to the rest of Asia and to the world.”

The CEO also suggested that attracting more initial public offerings may be another effective way for KRX to improve its management.

A combination of well-performing newly listed firms, low interest rates, and a bearish stock market have recently been drawing investors to funds investing in rookie stocks here, according to recent data.

Investors have poured a total of 983 billion won ($939 million) into more than 70 such funds this year, figures from fund evaluator KG Zeroin showed this week.

By Bae Hyun-jung (tellme@heraldcorp.com)