The National Pension Service faces reduced pressure to sell domestic stocks as the KOSPI decline has lowered the proportion of Korean equities in its total assets, though its domestic stock holdings remain above the year-end target ratio. The fund's total assets recently fell to around 1,700 trillion won from the 1,900 trillion won range within approximately one month, with the decline attributed to falling valuations of KOSPI-listed holdings including Samsung Electronics and SK Hynix. Despite the eased rebalancing pressure, NPS domestic stock allocation of slightly below 25% still exceeds the 20.8% year-end target, limiting the fund's ability to act as a market stabilizer during the downturn.
NPS Fund Assets Drop to 1,700 Trillion Won Range
The National Pension Service fund size recently declined to around 1,700 trillion won, according to the financial investment industry. The fund had reached the 1,900 trillion won range last month before the reversal occurred within approximately one month. The maximum decline ratio from the fund's peak reached double digits. NPS holds the majority of its domestic stock assets in KOSPI-listed equities including Samsung Electronics and SK Hynix.
Pension Fund Daily Selling Declines to 19.2 Billion Won
Pension funds sold an average of 19.2 billion won worth of domestic stocks per day through the 16th of this month, according to Korea Exchange data. This represents a significant decrease from the 73.8 billion won daily average selling amount recorded during January through June. The reduced selling activity followed the resumption of NPS rebalancing in July. NPS has been cautious about the negative impact mechanical selling could have on the domestic stock market.
NPS Domestic Stock Holdings Remain Above 20.8% Target
The National Pension Service's domestic stock allocation is estimated at slightly below 25% of total assets. This exceeds the fund's year-end target ratio of 20.8% but remains below the 26.8% upper limit when considering the strategic asset allocation (SAA) deviation allowance. The fund faces selling pressure if KOSPI rises above the 7,400 level, assuming tactical asset allocation (TAA) allowance is not utilized and other asset classes remain flat. For NPS to actively increase its domestic stock allocation, the actual investment ratio would need to fall below the target, which would require KOSPI to decline to the early 5,000 range.
FAQ
What is the National Pension Service's current domestic stock allocation?
The National Pension Service's domestic stock holdings are estimated at slightly below 25% of total assets, which exceeds the year-end target ratio of 20.8% but remains within the allowable upper limit of 26.8% when considering strategic asset allocation deviation allowance.
How much did pension funds sell in domestic stocks this month?
Pension funds sold an average of 19.2 billion won worth of domestic stocks per day through the 16th of this month, according to Korea Exchange data. This represents a decrease from the 73.8 billion won daily average selling amount recorded during January through June.
