The National Pension Service will raise its target for investing in domestic stocks to as much as 14.9% of total asset. The National Pension Service sets and manages a cap on the share of domestic stocks within its managed asset. As the share of domestic stocks exceeded the target amid the recent stock market rally, the cap will be raised to allow more investment in domestic stocks.
Kim Sung-ju, chair of the National Pension Service (NPS), said at a Ministry of Health and Welfare briefing held at the Government Sejong Convention Center on the 16th, "This year, domestic stock revenue is high, so we are operating beyond the investment cap," and "We intend to change the investment guidelines to respond quickly to conditions in the domestic market."
He was responding to a question from President Lee Jae-myung, who said, "Domestic stock prices have risen, and the National Pension Service (NPS) is also benefiting," and asked, "There is talk that the National Pension Service has exceeded its cap on domestic stock holdings."
Kim said, "In the past, overseas stock revenue was overwhelmingly high, but the situation has changed," adding, "We will convene the Fund Management Committee to discuss it."
This year, the National Pension Service's domestic stock target allocation ratio is 14.9%. Given that total asset stands at 1,361.2 trillion won, the goal is to invest about 203 trillion won in domestic stocks. However, due to rising stock prices and other factors, the valuation has increased, pushing the actual ratio up to 15.6% (211.9 trillion won as of the end of September). The National Pension Service sets an annual domestic stock target allocation ratio and allows it to fluctuate by 5 percentage points (p) to set upper and lower bounds. Minister Jung Eun-kyeong said, "We have not yet reached the upper bound (19.9%)."
Meanwhile, the National Pension Fund's investment revenue this year has surpassed 200 trillion won. The Minister, Jung said, "Revenue, including unrealized gains and losses, exceeds 200 trillion won," adding, "Gains from domestic stocks were assessed the highest." Jung went on, "If we achieve a 5.5% rate of return, the fund depletion point is projected to be 2071," and added, "If the rate of return exceeds that, depletion will be further delayed."
In response, President Lee said, "Please also give a lot of thought to managing the National Pension Service."
There is also an outlook that if the National Pension Service increases its share of domestic investment, it could ease the current strong dollar-won exchange rate. Some have noted that the more the National Pension Service increases overseas investments, the more demand there is to convert won into dollars, pushing up the won-dollar exchange rate.