The National Pension Service, known as 'the big player in the capital market,' has shown a continuous decrease in the number of general meetings and agenda items at domestic corporations since the current government took office. Last year, the number of dialogues with corporations also plummeted compared to the previous year. This trend is analyzed to be related to the National Pension Service's ongoing reduction in its investment proportion in domestic stocks.
Some are expressing concern over the decrease in the National Pension Service's exercise of voting rights amid the government's push for value-up policies in the domestic stock market. The exercise of voting rights by the National Pension Service has been regarded as a card to improve corporate transparency.
According to the National Pension Fund Management Headquarters on the 6th, the number of cases where the National Pension Service exercised its voting rights at the general meetings of domestic listed companies decreased for three consecutive years, from 825 in 2022 to 799 in 2023 and 756 in 2024. The 756 cases last year were the lowest since 2017, when there were 708 cases.
As the number of general meetings involving the National Pension Service decreases, the number of exercises of voting rights has also reduced. The number of agenda items presented for approval or disapproval by the National Pension Service in the same period declined from 3,439 to 3,165. The 3,165 cases are the lowest since 2018, which recorded 2,864.
Last year, the National Pension Service reportedly significantly reduced its 'dialogue with corporations.' This dialogue, which the National Pension Service has been implementing since 2019, involves conveying opinions to investee corporations regarding issues related to corporate value, such as dividend policies, to encourage voluntary improvements. The number of corporations the National Pension Service contacted or met privately reached 172 in 2023, down 14.5% from 147 last year.
In particular, the number of sent letters (both private and public) dropped sharply from 137 to 40, a 71% decrease. However, the number of private meetings increased from 160 to 208. When combining both sent letters and private meetings, the total number of dialogues between the National Pension Service and corporations reduced from 297 in 2023 to 248 last year.
The market analysis suggests that this trend is not unrelated to the National Pension Service's ongoing reduction in the proportion of domestic stocks compared to its total investment assets. According to the medium-term asset allocation plan of the National Pension Service, the target for the proportion of domestic stocks, which was around 20% in 2017, is set to decrease to 13% by the end of 2029. The target proportions at the end of last year and this year are 15.4% and 14.9%, respectively.
On the other hand, the target for the proportion of overseas stocks in the National Pension Service is expected to increase from 33.0% at the end of last year to 35.9% at the end of this year. The gap between the proportions of the two assets will exceed 20 percentage points for the first time this year, up from 17.6 percentage points last year. The National Pension Service aims to maximize revenue through enhanced overseas and alternative investment. The proportion of overseas investments is expected to grow to 60% by 2028.
An industry insider commented, 'If the National Pension Service continues with its current asset allocation plan without revising it, the influence during the general meeting season will inevitably weaken over time.'
There are also opinions suggesting that the decreasing exercise of voting rights by the National Pension Service concerning domestic listed companies should be viewed cautiously. The voting rights of the National Pension Service, which has substantial investment capacity, exert significant pressure on domestic listed companies to adopt shareholder-friendly policies. The decline in the exercise of voting rights by the National Pension Service can also be interpreted as a reduction in that pressure.
In particular, the current government introduced a value-up program to resolve the Korea discount (undervaluation of the Korean stock market) upon its inauguration in May 2022. Considering that the National Pension Service's structure makes it difficult to oppose the major trajectory of government policy, the three consecutive years of reduced exercise of voting rights have raised concerns that this contradicts the direction of that policy. The National Pension Service is a public institution under the Ministry of Health and Welfare.