The National Pension Service decided to expand the share of domestic stock investments by 0.5 percentage point this year. It will temporarily suspend automatic trades (rebalancing) used to adjust the domestic and overseas stock ratios it had been managing. The move is seen as aimed at easing concerns about a domestic market decline caused by the National Pension Service's automatic trades and supporting a boost to the domestic market.
The National Pension Fund management committee held the first meeting of 2026 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 top decision-making body that determines major matters of National Pension Fund management. It is the first time in five years that the committee, which usually met in February or March, convened in January.
At this meeting, the committee raised the target ratio for domestic stocks as of 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 deviates from the strategic asset allocation (SAA) allowable range, considering that the domestic stock ratio is above the target. The allowable range for strategic asset allocation is the limit (±3 percentage points) that tolerates differences from the target weight due to price fluctuations of an asset; previously, if it exceeded this, automatic trades were executed.
The committee appears to have concluded that selling domestic stocks and buying overseas stocks at the same time could weigh on the exchange rate and the domestic market. It also considered that the fund size has roughly doubled to 1,438 trillion won from 713 trillion won in 2019, when it set the rebalancing standards.
The committee said, "If rebalancing continues to occur amid high market volatility, it could have an excessive impact on the market," adding, "With the domestic stock market and foreign exchange market swinging sharply in a short period, it is difficult to accurately assess conditions and set appropriate asset allocation criteria."
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, "With the rise in domestic stock prices, the National Pension Service has exceeded its stock holding limits," and noted, "There is a need to reconsider the allocation ratio for domestic stocks."
The market sees it as a policy signal aimed at easing the burden of the National Pension Service's automatic selling to support the domestic market and encouraging the return of so-called overseas-focused retail investors to the domestic market.
Minister Jung Eun-kyeong of the Ministry of Health and Welfare said, "We plan to closely monitor market conditions in the first half and reconsider the allowable range for strategic asset allocation," adding, "We will continue to periodically review the range and make adjustments if necessary."