Concerns of a massive sell-off from the National Pension Service (NPS) during its domestic stock rebalancing have proven unfounded, as the actual market impact remained limited. Instead of a significant sell-off, the NPS adjusted its portfolio by reducing its holdings in stocks that had previously risen sharply, such as Samsung Electronics, while increasing investments in sectors like semiconductors, defense, and finance.
According to financial information service provider Yonhap Infomax, as of the market close on July 3, pension funds, including the NPS, recorded a net sell-off of 215.8 billion won ($162 million) in the stock market from July 1 to July 3. On the first day after the end of the rebalancing suspension, July 1, the net sell-off reached 218.1 billion won, but this amount decreased to 53.5 billion won on July 2, and the funds returned to net buying with 55.8 billion won on July 3.
In terms of individual stocks, the NPS sold the most shares of Samsung Electronics, totaling 197 billion won. Other significant sell-offs included SK Square (196.7 billion won), Samsung Electro-Mechanics (124.3 billion won), Samsung C&T (65.6 billion won), SK (27.9 billion won), LG Innotek (27.8 billion won), Samsung Life Insurance (26.4 billion won), Hyundai Mobis (21 billion won), SK Telecom (18.8 billion won), and Hyundai Motor (16.3 billion won).
Conversely, the most purchased stock was SK Hynix, with a net buying of 108.5 billion won. Other notable purchases included Hanwha Aerospace (56.7 billion won), Shinhan Financial Group (53.2 billion won), Celltrion (38.4 billion won), Amorepacific (38.3 billion won), Korean Air (36.3 billion won), HYBE (33.7 billion won), LS (32.1 billion won), A.P. (21 billion won), and GS (17.6 billion won).
The pension fund transactions reflect not only the NPS but also other pension funds, such as the Teachers' Pension and the Government Employees Pension Fund. However, due to the NPS's larger operational scale, its trading activities are viewed as an indirect indicator of overall pension fund rebalancing.
Following a surge in the domestic stock market in the first half of the year, concerns arose that the NPS might release a large volume of stocks after the rebalancing suspension ended, with some estimates suggesting a potential sell-off of up to 74 trillion won.
However, in May, the Fund Management Committee raised the target allocation for domestic stocks from 14.9% to 20.8% and expanded the allowable range for strategic asset allocation (SAA) to ±6 percentage points. When tactical asset allocation (TAA) is applied, the operational range can extend to ±8%, and adjustments were made to the maximum daily rebalancing amount and monthly and annual selling limits to mitigate market impact.
Market analysts believe that the actual selling impact will not be as severe as initially feared. Han Ji-young, a researcher at Kiwoom Securities, stated, "Considering the allowable range, the actual volume of sell-offs is likely to be around 15 trillion won. The NPS tends to sell its portfolio in favorable market conditions to minimize the impact on the market."
The NPS has also dismissed concerns about a sell-off bomb. Jeong Eun-kyeong, Minister of Health and Welfare, stated during the NPS Fund Management Committee meeting on July 2, "We will manage the rebalancing to minimize market impact, even if it occurs." Kim Sung-joo, Chairman of the NPS, added, "The possibility of rebalancing becoming a 'bomb' is zero, and there will be no large-scale sell-off in the short term."
* This article has been translated by AI.
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