Will the "KOSPI 5000" Era Be Derailed? National Pension Service Moves Amid Forced Selling Crisis

Unusual January Meeting of NPS Fund Management Committee
Need for Portfolio Adjustment as Domestic Stocks Surge
Debate Grows Over NPS Role Amid Soaring Exchange Rate

As the won-dollar exchange rate continues to soar and the domestic stock market remains extremely bullish, the National Pension Service is taking the unusual step of convening a Fund Management Committee meeting in January.

As the KOSPI reached an all-time high of 5021.13 during the session, an employee is monitoring the stock market and exchange rates in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul on the 23rd. On this day, the KOSPI opened at 4984.08, up 31.55 points (0.64%) from the previous trading day (4952.53). January 23, 2026 Photo by Jo Yongjun

The Fund Management Committee is the highest decision-making body that deliberates and decides on major matters related to the management of the National Pension Fund. Typically, the first meeting of the year is held in February or March to review the previous year’s settlement.

However, this time, the meeting is being called in January before the settlement is complete, marking the first such occurrence in five years since 2021.

Domestic Stock Allocation Hits Maximum of 19.4%... Forced Selling May Be Unavoidable

According to the Ministry of Health and Welfare on January 25, the National Pension Service will hold its first Fund Management Committee meeting of the year on January 26 to review its fund management strategy. With the domestic stock market surging, it is expected that the National Pension Service’s portfolio will be adjusted.

Previously, the Fund Management Committee set the domestic stock allocation for the National Pension Service in 2026 at 14.4%. Taking into account the allowable adjustment range of ±5 percentage points for each asset class, the maximum allocation is 19.4%.

However, as the KOSPI continues its upward trend, it has become difficult to maintain this allocation. As of the end of October last year, the National Pension Service’s domestic stock allocation had already reached 17.9%, surpassing the target. Considering the continued rise of the KOSPI since then, the allocation may be approaching or even exceeding the maximum limit.

According to the principles of asset allocation, the National Pension Service may be forced to sell domestic stocks unconditionally. This could not only dampen the stock market but also impact the fund’s returns.

President Lee Jaemyung stated during the National Pension Service’s work report at the end of last year, “I heard that the recent rise in domestic stock prices has delayed the depletion of the National Pension Fund and that the domestic stock holding limit has also been exceeded. While I am cautious about commenting on the domestic stock market, I believe the National Pension Service should also consider this issue.” This was interpreted as suggesting the need to adjust the fund’s portfolio, specifically to increase the proportion of domestic stock investments.

Kim Sungjoo, Chairman of the National Pension Service, responded at the meeting, “This year (2025), the domestic stock market’s returns have been exceptionally high, causing us to exceed the domestic stock holding limit. While it is impossible to predict the situation in the domestic stock market next year, we plan to convene the Fund Management Committee next year to promptly revise our investment guidelines.”

President Also Addresses High Exchange Rate Situation... "Around 1,400 Won in Two Months"

On the 20th, the KOSPI index, KOSDAQ index, and exchange rate are displayed on the status board in the dealing room of Hana Bank in Jung-gu, Seoul.

The situation where the won-dollar exchange rate is fluctuating in the upper 1,400 won range may also be discussed at the committee meeting.

On January 21, President Lee made a rare comment about the weak won during a press conference. When asked about concerns that the exchange rate could rise to 1,500 won, President Lee said, “According to the (foreign exchange) authorities, the forecast is that the rate will fall to around 1,400 won in a month or two.”

It is very rare for the president to present such a specific timeframe and figure regarding the exchange rate. Although the government and the Bank of Korea have recently announced measures to stabilize the exchange rate, focusing on resolving the dollar supply-demand imbalance, they have never disclosed any specific forecasts or targets. Simply mentioning a certain exchange rate level could itself shock the market. This has been interpreted as a sign that the president views the foreign exchange situation as very serious.

On January 23, Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol also commented on the high exchange rate situation, telling reporters, “There will probably be some good news coming from the National Pension Service.” He added, “If that happens, the high exchange rate situation may gradually be resolved,” expressing his expectations.

When asked again whether he believed, as President Lee mentioned, that 1,400 won would be possible in a month or two, the Deputy Prime Minister replied, “We will make every possible effort.”

Bank of Korea Governor Lee Changyong also commented immediately after the president’s remarks on January 21, stating, “By any model, the current exchange rate is at a high level,” and “Anyone can see that there is significant room for the current exchange rate to adjust.”

Previously, the Fund Management Committee concluded that the National Pension Service needs to implement strategic currency hedging flexibly in response to market conditions and formed a consultative body centered on committee members and members of the Investment Policy Advisory Committee. The Ministry of Health and Welfare has created a task force to carry out currency hedging within the scope delegated by this consultative body.

Global investment bank Goldman Sachs recently predicted in a report titled "Korean Won: Is the Weak Phase Nearing Its End?" that the National Pension Service may expand its currency hedging activities.