The National Pension Service (NPS), a major investor in Korea's stock market, resumed rebalancing this month, but the large-scale pension fund selling that markets had feared did not materialize. Rather than intensively disposing of domestic stock assets, pension funds turned to net buying and concentrated their purchases on SK hynix (000660.KS). Samsung Group affiliates topped the net selling list.
According to the Korea Exchange on the 26th, the "pension funds, etc." category, which includes the NPS, net bought 68.4 billion won worth of stocks in the KOSPI market from the 1st to the 24th. Pension funds had net sold domestic stocks every month in the first half of the year — 1.8911 trillion won in January, 681.6 billion won in February, 764.8 billion won in March, 896.1 billion won in April, 2.1617 trillion won in May, and 2.337 trillion won in June — but turned to net buying this month as the NPS began rebalancing. Pension funds net sold on only six trading days this month, fewer than half.
The top net-bought stock was SK hynix (425.8 billion won). Pension funds had also net bought SK hynix in the largest amount last month. SK Innovation (224.7 billion won) ranked second, followed by S-Oil (174.4 billion won), DB Insurance (109.4 billion won), Celltrion (95.3 billion won), and Korean Air (89.9 billion won). The top net-sold stock was SK Square (575.7 billion won), while the second, third, and fifth places went to Samsung Group affiliates — Samsung Electro-Mechanics (313.6 billion won), Samsung Life Insurance (123.8 billion won), and Samsung Electronics (111.5 billion won). LG Innotek (111.9 billion won) ranked fourth.
Markets had initially feared that pension funds could embark on large-scale disposals of domestic stocks this month. The NPS manages target weightings for each asset class to prevent excessive concentration of funds in specific assets and to stably manage long-term returns. The domestic stock weighting far exceeded the target amid this year's surge in Korea's stock market, and the NPS's suspension of domestic stock rebalancing ended late last month. As a result, concerns arose that an NPS-driven "sell-off" of up to 74 trillion won could occur starting this month, but net buying flows unfolded instead.
"The recent sharp market correction reduced the valuation of domestic stock assets, which likely eased some of the NPS's rebalancing burden," a securities industry official said. "It also appears possible that pension funds engaged in bargain buying as a steep decline unfolded."
