The National Pension Service decided to expand the share of domestic stock investments this year by 0.5 percentage points. It will temporarily suspend automatic trades (rebalancing) used to adjust the domestic and overseas stock ratios it had been operating. The move is seen as an effort to ease concerns about a decline in the domestic market stemming from the National Pension Service's automatic trades and to support a boost in the domestic market.
The National Pension Fund management committee held its first 2026 meeting on the afternoon of the 26th at Government Complex Seoul and reviewed and approved the "National Pension Fund portfolio improvement plan." The management committee is the highest decision-making body that determines major matters in the operation of the National Pension Fund. It is the first time in five years that the committee, which is usually held in February or March, has met in January.
At this meeting, the committee raised the target ratio for domestic stocks at the end of 2026 to 14.9% from the previous 14.4%. In contrast, it lowered the target ratio for overseas stocks by 1.7 percentage points, to 37.2% from 38.9%.
The committee also decided to temporarily defer rebalancing even if it departs from the strategic asset allocation (SAA) band, given that the domestic stock ratio exceeds the target. The permissible band for strategic asset allocation is the limit (±3 percentage points) that tolerates deviations from the target share due to price movements of assets, and previously, if this was exceeded, assets were automatically bought and sold.
The committee appears to have concluded that simultaneous selling of domestic stocks and buying of overseas stocks could burden the exchange rate and the domestic market. It also took into account that the fund's size has roughly doubled to 1,438 trillion won from 713 trillion won in 2019, when the rebalancing criteria were set.
The committee said, "If rebalancing continues to occur in a situation of high market volatility, there is a risk of excessive impact on the market," and added, "With the domestic stock market and foreign exchange market swinging sharply in a short period, it is difficult to accurately assess market conditions and set appropriate asset allocation benchmarks."
The decision also appears to have been influenced by recent remarks by President Lee. At a National Pension Service briefing late last year, President Lee said, "Due to the rise in domestic stock prices, the National Pension Service's stock holding limit has been exceeded," and noted, "It is necessary to reexamine the domestic stock allocation ratio."
The market sees it as a policy signal intended to ease the pressure of the National Pension Service's automatic selling to support the domestic market and to encourage the return to the domestic market of so-called "Seohak" retail investors who have been investing in overseas stocks.
Minister Jung Eun-kyeong of the Ministry of Health and Welfare said, "During the first half, we will closely monitor market conditions and reexamine the strategic asset allocation band," and added, "We will continue to periodically review the band and make adjustments if necessary."