Samsung Electronics and LG Chem... Pension Funds Sold 4.7 Trillion Won in Ten Days

[Asia Economy Reporter Koh Hyung-kwang] Pension funds, the 'big players' in the stock market, have reportedly offloaded nearly 5 trillion won worth of stocks in the KOSPI market so far this year. It is analyzed that they are adjusting the proportion of domestic stocks according to their asset allocation policy by mainly selling stocks that have risen significantly.

According to the Korea Exchange on the 18th, pension funds including the National Pension Service (NPS) have net sold a total of 4.71 trillion won worth of stocks in the KOSPI market over 10 trading days up to the 15th of this year. This far exceeds last year's net selling volume in the KOSPI market (2.81 trillion won) and accounts for 40% of the total net selling by institutional investors this year (11.89 trillion won). Considering that there were only ten trading days this year, this amounts to an average daily selling volume of about 470 billion won.

The selling trend by pension funds began in the second half of last year. While pension funds showed a buying preference during the first half of last year, they have consistently continued selling since July, with net sales of 1.12 trillion won in July, 1.54 trillion won in August, 1.32 trillion won in September, 534.8 billion won in October, 1.11 trillion won in November, and 1.81 trillion won in December.

It is analyzed that as the stock market rose sharply and the stock investment ratio exceeded the target, pension funds engaged in mechanical selling. Pension funds adjust their asset proportions according to pre-established fund management plans. For the largest pension fund, the National Pension Service, the domestic stock ratio was 17.3% at the end of last year. However, as of the end of October last year, the NPS's domestic stock ratio was 18.0%, meaning it needed to reduce this by 0.7 percentage points by the end of the year, which likely led to continued selling. In the NPS portfolio managing 770 trillion won, 0.7 percentage points correspond to about 5.4 trillion won.

So far this year, the stock most sold by pension funds is Samsung Electronics. Up to the 15th, they sold a total of 3.97 trillion won worth of Samsung Electronics shares. Samsung Electronics' stock price rose more than 40% from 55,200 won at the beginning of last year to 81,000 won at the end of the year. Pension funds also sold nearly 1 trillion won each of LG Chem (998.7 billion won) and Naver (899.6 billion won), whose stock prices rose 159% and 51% respectively last year.

Other stocks with significant price increases that ranked high in pension funds' net selling include Hyundai Motor (661.8 billion won), SK Hynix (605.7 billion won), Celltrion (378.8 billion won), Kakao (279.8 billion won), and Hyundai Glovis (217.4 billion won). A financial investment industry official said, "As the stock market rose, pension funds realized gains mainly on high-yield stocks to adjust the domestic stock ratio to an appropriate level," adding, "The selling trend by pension funds is likely to continue for some time."