Pension Funds Net Sold for 51 Days...Only Bought 경기민감 Stocks

S-Oil Leads with 115.8 Billion KRW in Net Purchases
Followed by POSCO and Lotte Chemical
Samsung Electronics Tops Net Sales at 4.7 Trillion KRW

[Asia Economy Reporter Park Jihwan] Despite the National Pension Service and other pension funds continuing their longest-ever consecutive net selling streak for 51 trading days, they have recently been focusing on buying cyclical stocks such as refining, steel, chemicals, and distribution.

According to the Korea Exchange on the 15th, the stock most purchased by pension funds from the 10th of last month to the 12th of this month was S-Oil. During this period, the scale of stocks purchased by pension funds reached 115.8 billion KRW. S-Oil is expected to improve its performance recently due to rising oil prices and strong petrochemical products. Lee Dongwook, a researcher at Kiwoom Securities, stated, "Compared to November-December last year, the average oil price from February to March this year rose by more than 15 dollars per barrel, and refining sector inventory revaluation gains are expected to increase significantly," adding, "Margins for most petroleum products such as gasoline and naphtha are also expected to improve greatly compared to the previous quarter."

POSCO (96.9 billion KRW), Lotte Chemical (94.3 billion KRW), KT (85.5 billion KRW), Shinsegae (60.1 billion KRW), Samsung Life Insurance (53.5 billion KRW), Pan Ocean (46.9 billion KRW), OCI (41.7 billion KRW), and HiteJinro (40.2 billion KRW) were also among the top net purchased stocks by pension funds.

Most of these companies are classified as cyclical stocks affected by economic factors such as rising interest rates and inflation. Recently, as yields on 10-year government bonds surged in both Korea and the U.S. bond markets, the investment appeal of risk assets centered on growth stocks has significantly declined. It is analyzed that interest in cyclical stocks is increasing due to expectations of real economic recovery from the widespread distribution of COVID-19 vaccines and unprecedented liquidity supply policies by governments worldwide.

Lee Jaeyoon, a researcher at SK Securities, explained, "Currently, cyclical stocks have high expectations for earnings improvement," adding, "Most sectors that have recently seen significant upward revisions in annual and first-quarter net profit estimates this year are display, transportation, chemical, steel, machinery, and financial stocks."

The returns of the stocks that pension funds have been concentrating on buying are also favorable. Among the top 10 net purchased stocks by pension funds, excluding KODEX 200, the average return of the remaining nine stocks is about 11.3%. Pan Ocean’s stock price rose 32.2% from 4,835 KRW to 6,390 KRW, followed by Shinsegae at 17.6%, KT at 11.6%, POSCO at 11.1%, OCI at 9.2%, Samsung Life Insurance at 8.7%, HiteJinro at 7.8%, S-Oil at 3.4%, and Lotte Chemical at 0.2%. Meanwhile, during the same period, the KOSPI fell by -1.49%.

Meanwhile, pension funds have continued their longest-ever net selling streak for 51 trading days since December 24th last year. During this period, the total net selling amount by pension funds reached 14.4977 trillion KRW. The pension funds’ selling was mainly concentrated on large-cap KOSPI stocks classified as growth stocks, such as Samsung Electronics and Hyundai Motor. The largest net selling amount was Samsung Electronics at 4.7682 trillion KRW, accounting for 32.9% of the total net selling amount.