South Korea’s National Pension Service (NPS) resumed portfolio rebalancing on Wednesday, triggering net sales of 217.9 billion won ($140 million) on the KOSPI benchmark market.
Rebalancing resumes after six‑month pause
Data from the Korea Exchange and Nextrade show the pension fund’s activity on the main board was the primary driver of the day’s net outflow. The 217.9 billion won figure is roughly 95 percent higher than the average daily net sales of 111.7 billion won recorded while rebalancing was suspended.
During the suspension, the Ministry of Health and Welfare had halted the NPS’s regular adjustments to avoid adding volatility to a sharply rising market. The pause covered the period from January through the end of June.
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Big‑ticket stocks sold
Stocks that posted the biggest gains this year bore the brunt of the selling. Samsung Electronics led with a net sale of 98.1 billion won, followed closely by SK Square at 95.8 billion won. Other notable net‑selling positions included Samsung Electro‑Mechanics (44.2 billion won), Samsung C&T (23.9 billion won), Samsung Life Insurance (15.1 billion won), LG Innotek (14.8 billion won) and Samsung Fire & Marine Insurance (13.1 billion won).
The fund’s activity was notable.
Samsung Electronics’ share price rose about 178 percent in the first half of the year, climbing from roughly 110,000 won to 330,000 won. SK Square surged about 361 percent, moving from around 360,000 won to 1.69 million won.
Selective buying continues
Even as the NPS trimmed its domestic equity exposure, it remained a net buyer of certain stocks. The pension fund purchased SK hynix worth 108 billion won, Amorepacific for 14.9 billion won and Samsung E&A for 9.3 billion won. On the KOSDAQ market, the fund logged net purchases of 49.8 billion won.
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The rebalancing process is designed to keep the portfolio aligned with long‑term targets. When an asset class exceeds its prescribed weight, the fund sells; when it falls short, the fund buys. This helps maintain expected returns and reduces concentration risk.
Policy changes expand flexibility
In late May, the government raised the NPS’s target allocation to domestic equities from 14.9 percent to 20.8 percent for the current year. It also widened the strategic asset allocation (SAA) band from ±3 percentage points to ±6 percentage points. Together with the tactical asset allocation (TAA) range of ±2 percentage points, the domestic equity share can now swing by up to eight points.
Although the expanded band allows the allocation to rise as high as 28.8 percent, the NPS has indicated it will use the tactical range sparingly. Daishin Securities estimated that, based on the KOSPI closing level of 8,411.21 on June 26, the fund’s domestic equity holdings were already about 164 trillion won, or 9.2 percentage points, above the target.
Fully exploiting the new SAA range could require selling roughly 57.06 trillion won of equities. If the TAA band is also applied, the required sales might drop to about 21 trillion won.
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Market impact and outlook
The NPS has deliberately lowered its annual, monthly and daily rebalancing limits to avoid abrupt market moves. Analysts expect the fund to continue adjusting its domestic equity exposure gradually through the end of the year, while monitoring conditions that could justify a further increase in its long‑term target.
Byun Jun‑ho, an analyst at IBK Securities, noted that the NPS’s selling alone is unlikely to sway the market significantly. He cautioned, however, that concurrent divestments by other institutional investors and foreign participants could amplify volatility.
For now, the pension fund’s actions reflect a measured approach: reducing overweight positions while still seeking opportunities in select growth stocks. The balance between disciplined rebalancing and market timing remains a central theme for the NPS as it handles a year of strong equity performance.
