Pension funds in South Korea net purchased 100.7 billion won worth of stocks on the Korea Exchange during the week of 13-16, marking the second consecutive week of net buying focused on semiconductor stocks. The buying shift follows the National Pension Service's decision to raise its domestic stock target ratio from 14.9% to 20.8% and expand its strategic asset allocation range, which reduced mechanical selling pressure from rebalancing requirements. The KOSPI index experienced extreme volatility during this period, plunging nearly 9% on the 13th before rebounding and then falling over 6% again on the 16th, dropping below the 7000 level.
Pension Funds Purchase SK Hynix and Samsung Electronics
According to the Korea Exchange, pension funds net bought 100.7 billion won during the week of 13-16, following an 8.8 billion won net purchase the previous week. After selling over 5 trillion won during May and June, pension funds shifted to bottom-fishing during the recent volatility.
SK Hynix was the most purchased stock with 141.2 billion won in net buying, followed by SK Innovation (103.5 billion won), Samsung Electronics (80.5 billion won), and S-Oil (50.1 billion won). Financial stocks also saw selective buying, including Hana Financial Group (44.7 billion won), Samsung Fire & Marine Insurance (38 billion won), and DB Insurance (26.6 billion won).
SK Square was the largest net sell at 103.3 billion won, followed by LG Innotek (60.6 billion won), Hyundai Motor (39.1 billion won), Hyundai Rotem (33.9 billion won), Samsung Life Insurance (27.8 billion won), KB Financial (21 billion won), and Hanwha Ocean (20.4 billion won). Some leisure stocks including Paradise and Lotte Tour Development also saw profit-taking.
Compared to the previous week, the bottom-fishing trend became more pronounced. The previous week saw net purchases of SK Hynix (110.9 billion won), Samsung Electronics (72 billion won), and S-Oil (79.3 billion won), while Samsung Electro-Mechanics (169.4 billion won in net selling), SK Square (138.4 billion won), and Hanwha Ocean (51.3 billion won) were sold. The pattern of buying semiconductor leaders and selling SK Square continued into the current week.
National Pension Service Raises Domestic Stock Target Ratio to 20.8%
Market analysts attribute the shift to reduced rebalancing pressure from the National Pension Service. The NPS raised its domestic stock target ratio from 14.9% to 20.8% and expanded its strategic asset allocation tolerance range, reducing the mechanical need to sell stocks. The KOSPI's correction this month also lowered the domestic stock weight naturally, further decreasing the need for additional selling.
Lee Kyung-soo, a researcher at Hana Securities, stated that from the National Pension Service's perspective, the current Korean stock weight target is positioned within the 15-27% range, eliminating the need for net selling rebalancing. Lee noted that pension funds' buying during index declines has theoretical grounds and has historically played a key role in forming KOSPI bottoms.
FAQ
How much did pension funds buy during the week of 13-16?
Pension funds net purchased 100.7 billion won worth of stocks on the Korea Exchange during the week of 13-16, following an 8.8 billion won net purchase the previous week.
Which stocks did pension funds purchase the most?
SK Hynix was the most purchased stock with 141.2 billion won in net buying, followed by SK Innovation at 103.5 billion won and Samsung Electronics at 80.5 billion won.
Why did pension funds shift to net buying after months of selling?
The National Pension Service raised its domestic stock target ratio from 14.9% to 20.8% and expanded its strategic asset allocation range, which reduced mechanical selling pressure from rebalancing requirements.
