National Pension Service to Re-Pursue Changes in Domestic Stock Investment Limits on the 9th

[Asia Economy Reporter Park So-yeon] The National Pension Fund Management Committee will reattempt to halt the sale of domestic stocks on the 9th.

According to the National Pension on the 6th, the fund committee meeting on the 9th will discuss and decide on the review (rebalancing) plan of the 'National Pension Fund Management Target Ratio Maintenance Rule.' This comes two weeks after it was postponed due to opposition from private committee members at the fund committee meeting held on the 26th of last month.

The proposal keeps the domestic stock target ratio for this year at 16.8% but expands the problematic strategic asset allocation (SAA) allowable range from the current ±2 percentage points to ±3~3.5 percentage points within the total allowable limit of ±5%.

If this agenda passes, the current domestic stock SAA allowable range of 14.8~18.8% will widen to 13.3~20.3%.

As of the end of last month, the National Pension's domestic stock ratio was 19.1%. To comply with the current allowable range, the stock ratio would need to be further reduced, but if the allowable range changes, there will be no need to sell, and additional purchases will become possible.

At the end of last year, the total funds managed by the National Pension amounted to 833 trillion won, of which the domestic stock ratio had increased to 21.2% (176.7 trillion won).

Last year, when the domestic stock market plunged due to the novel coronavirus disease (COVID-19), the fund strategically engaged in low-price purchases, and as the market quickly recovered, the proportion of domestic stocks in the assets significantly increased.

Subsequently, as profits were realized at the peak and the ratio was reduced, net sales occurred for 51 consecutive trading days from December 24 last year to the 12th of this month, which sparked strong backlash from individual investors such as 'Donghak Ants.'

The National Pension finalizes its fund management plan every May, so discussing rebalancing at this point is unusual.

Amid analyses that pressure from individual investors criticizing the National Pension's selling trend as 'mechanical selling' influenced the decision, there are also criticisms that the government and the National Pension have shaken the principles of retirement fund management under public pressure.