South Korea's National Pension Service sold 205.8 billion won in stocks over eight trading days from July 1 to July 10, averaging approximately 25.7 billion won per day according to Korea Exchange data released July 12. The selling volume represents less than one-quarter of the pension fund's daily average net sales in June, which totaled 111.7 billion won per day. The reduced selling activity followed a sharp decline in the KOSPI index from the 9,100 level at the end of June to the 7,500 level, alleviating market concerns about large-scale rebalancing pressure from the National Pension Service. Market participants had feared up to 60 trillion won in potential selling over an extended period as the pension fund adjusted its portfolio allocation.
National Pension Service Sells 205.8 Billion Won Over Eight Trading Days
The National Pension Service and other pension funds sold a total of 205.8 billion won in KOSPI stocks during the eight trading days from July 1 to July 10, according to Korea Exchange data. The daily average net sales of approximately 25.7 billion won marked a significant decrease from June's daily average of 111.7 billion won.
Yoon Yeo-sam, a researcher at Meritz Securities, estimated in a recent report that the National Pension Service's domestic stock allocation reached 31.1% when the KOSPI index peaked at 9,114 on June 22, and stood at 29.5% when the index was at 8,476 at the end of June. The allocation was observed to have declined to 26.3% as the KOSPI dropped to 7,246 on July 8.
KOSPI Decline Reduces NPS Domestic Stock Allocation to 26.3%
Yoon stated that the 26.3% allocation falls within the Strategic Asset Allocation (SAA) allowable range, indicating that the National Pension Service's mechanical selling pressure is expected to ease. The National Pension Service manages target allocations for each asset class through rebalancing according to its mid- to long-term asset allocation plan. When a specific asset's allocation significantly deviates from the target, the fund sells excess assets or purchases insufficient assets.
The fund committee temporarily suspended rebalancing until the end of June in January as the KOSPI surged this year. In May, the committee raised this year's domestic stock target allocation from 14.9% to 20.8% and expanded the SAA allowable range from ±3 percentage points to ±6 percentage points. Combined with the Tactical Asset Allocation (TAA) of ±2 percentage points, the fund can now operate flexibly up to ±8 percentage points. Using the full SAA range allows the fund to maintain a domestic stock allocation of up to 26.8%, or up to 28.8% when TAA is also utilized.
Although the KOSPI index recovered to the 7,400 level on July 10, selling pressure is not estimated to have expanded significantly. A financial investment industry official stated that the possibility of large-scale selling that the market had feared is unlikely in the near term, as the domestic stock allocation has been substantially lowered due to the recent correction.
NPS Sells Samsung Electronics and SK Square, Buys SK Hynix
Pension funds focused on profit-taking primarily in stocks that had experienced steep price increases recently. The top net-sold stock by pension funds this month was SK Square at -335.1 billion won. This was followed by Samsung Electro-Mechanics at -294.3 billion won, Samsung Electronics at -127.9 billion won, Samsung C&T at -62.2 billion won, and Hanwha Ocean at -59.7 billion won. LG Innotek at -54.6 billion won and LG Energy Solution at -51.3 billion won also faced selling pressure.
The top net-bought stock was SK Hynix at 219.2 billion won. Shinhan Financial Group at 99.7 billion won, Korean Air at 86.0 billion won, HYBE at 79.0 billion won, S-Oil at 77.7 billion won, and Kia at 58.5 billion won also ranked among the top net purchases.
FAQ
How much did the National Pension Service sell in Korean stocks from July 1 to July 10?
The National Pension Service and other pension funds sold a total of 205.8 billion won in KOSPI stocks over eight trading days from July 1 to July 10, averaging approximately 25.7 billion won per day according to Korea Exchange data released July 12.
Why did the National Pension Service reduce its selling activity in July?
The reduced selling activity followed a sharp decline in the KOSPI index from the 9,100 level at the end of June to the 7,500 level. This decline lowered the pension fund's domestic stock allocation to 26.3%, which falls within the Strategic Asset Allocation allowable range, thereby alleviating mechanical selling pressure.
Which stocks did the National Pension Service sell and buy in July?
The National Pension Service sold SK Square (-335.1 billion won), Samsung Electro-Mechanics (-294.3 billion won), and Samsung Electronics (-127.9 billion won) as top net-sold stocks. The fund bought SK Hynix (219.2 billion won), Shinhan Financial Group (99.7 billion won), and Korean Air (86.0 billion won) as top net purchases.
