No '60 Trillion Won Sell-Off' From National Pension Service; Daily Sales Around 25 Billion Won Amid Market Downturn

Concerns about a massive sell-off from the National Pension Service (NPS) have largely subsided, as the actual volume of stock sales has been minimal. The KOSPI index's decline from its peak of over 9100 to around 7500 has eased the pressure on the NPS to rebalance its portfolio, which had been a significant market fear.

In the first eight trading days of July, the NPS and other pension funds sold a net 205.8 billion won worth of stocks in the KOSPI market. This averages to about 25.7 billion won per day, less than a quarter of the daily average sales in June (111.7 billion won). This reduced selling pressure is attributed to the market's correction.

Analysts estimate that the NPS's domestic stock holdings have decreased significantly. Yoon Yeo-sam, a researcher at Meritz Securities, suggested that the NPS's domestic stock proportion fell to an estimated 26.3% by July 8, down from 31.1% around June 22. This level is considered within the permissible range for strategic asset allocation (SAA), further mitigating mechanical selling pressure.

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The mechanical selling pressure of the National Pension Service is expected to ease as the proportion is within the strategic asset allocation (SAA) permissible range.

To manage its long-term asset allocation, the NPS rebalances its portfolio to maintain target proportions across asset classes. However, the fund's committee temporarily postponed rebalancing from January to the end of June due to the KOSPI's surge. In May, the target domestic stock allocation was raised to 20.8% from 14.9%, and the SAA tolerance range was expanded, allowing for more flexible management. While the KOSPI has recovered somewhat, the market anticipates that large-scale selling is unlikely to resume soon, given the reduced domestic stock proportion.

Recent selling activity by pension funds has focused on stocks that experienced rapid price increases. SK Square was the top net sell for the NPS this month, followed by Samsung Electro-Mechanics and Samsung Electronics. Conversely, SK Hynix was the top net purchase, with Shinhan Financial Group and Korean Air also seeing significant buying interest.

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Given that the domestic stock proportion has significantly decreased due to the recent adjustment, the possibility of large-scale selling that the market has been concerned about is unlikely to increase for the time being.