Pension funds sold 1.5623 trillion won worth in the stock market over five trading days. With the deferral of asset allocation rebalancing (asset readjustment) at the end of this month approaching, analysts said the National Pension Service, which accounts for a large portion of pension funds, is preemptively selling domestic stocks.
According to the Korea Exchange (KRX) on the 23rd, pension funds posted net sales of 1.5623 trillion won in the stock market over five trading days from the 17th to the day. Over the past month, they recorded net sales of about 2.8 trillion won.
As volatility in the domestic stock market increased in January this year, the National Pension Service temporarily eased asset allocation standards in response. After that, at the fund management committee last month, it raised this year's target ratio for domestic stocks to 20.8% from 14.9%, and also expanded the allowable range for strategic asset allocation (SAA).
However, as the KOSPI surged steeply from 5,000 points (p) to 9,000p this year, the National Pension Service's domestic stock ratio is said to have risen from 24.5% in February to over 30%.
In the market, this is interpreted as the National Pension Service preemptively selling stocks ahead of the end of the deferral of asset allocation rebalancing. Lee Kyung-min, a researcher at Daishin Securities, said, "As of the 19th, the domestic stock ratio in the National Pension Service portfolio is estimated to have expanded to 31.4%," and analyzed, "Selling pressure from rebalancing could gradually increase."
Kim Sung-joo, chairman of the National Pension Service, addressed concerns that a large amount of stocks held by the National Pension Service hitting the market could drag down the market, saying, "If the goal were only to make money as in the private sector, they would dump large volumes or buy on the cheap, but the National Pension Service acts very prudently." On adjusting the share of domestic stock investments, Kim said, "Under the public-interest principle of minimizing market shock, we will make judgments by comprehensively considering domestic market conditions and the market environment."
According to the Korea Exchange (KRX), the top net-sold stock by pension funds over the past month was Samsung Electro-Mechanics at 777 billion won. It was followed by SK Square at 474.9 billion won, Mirae Asset Securities at 292.1 billion won, Doosan at 211.7 billion won, LG Innotek at 187.9 billion won, and Samsung Electronics preferred at 185.8 billion won.
Over the past month, the top net-bought stocks by pension funds were Naver at 470.9 billion won, SK hynix at 441.5 billion won, Hyundai Mobis at 177.7 billion won, Samsung Life Insurance at 112 billion won, and Shinhan Financial Group at 101.5 billion won.
On the day, the KOSPI index closed at 8,203.84, down 9.99% (910.71 points) from the previous trading day. By the magnitude of the drop, it was the largest decline on record.