South Korea is creating software for digital reporting in a bid to attract more foreign investors and boost a long-undervalued stock market.

In what the country’s financial watchdog says is the first such step anywhere, officials have developed an IT tool for companies’ financial statements. Firms will be asked to use a data format known as XBRL — which is both human and machine-readable and used in dozens of countries — from the third quarter.

The change is being made to tackle the language barrier overseas investors often face when reading financial statements. That’s a hurdle the country is keen to surmount to attract more foreign capital to its $1.8 trillion equities market.

“New developments in AI mean that within a very short space of time, digitally ‘tagged’ financial statements will be subject to in-depth analysis by a much broader set of investors and users,” said John Turner, chief executive officer of XBRL International.

Officials in Asia’s fourth-largest economy are looking at a series of measures to finally win the coveted developed market label following a review by MSCI in June — a move that could attract tens of billions of dollars worth of inflows. MSCI flagged the shortcoming in an assessment last year.

Currently, the Kospi benchmark index trades at about one third of the book value of global equities, and about half of Taiwan’s, Bloomberg-compiled data show.

XBRL will also help investors decipher footnotes in reports related to real estate project financing, which was at the heart of Korea’s debt market turmoil last year.

A conference has been scheduled in Seoul on Thursday as part of the rollout. The Financial Supervisory Service will also phase in English disclosures from July.

The new requirements, “will open up opportunities for investors that simply don’t exist today,” Turner said.

--With assistance from Youkyung Lee.