NPS Avoids Massive Sell-Off, Sells SK Square and Buys Shinhan Financial Group

One week after the National Pension Service (NPS) began rebalancing, there was no large-scale selling, contrary to market concerns.
According to the Korea Exchange on the 8th, pension funds and similar institutions posted net selling of 466.5 billion won in the domestic stock market from the 1st through the previous day. The Korea Exchange's tally for pension funds and similar institutions is heavily influenced by the NPS.
On a daily average, they sold about 77.7 billion won net this month. That is not far from the 73.8 billion won average daily net selling recorded by pension funds in the first half of the year. Net selling was concentrated in stocks in which they held large positions. So far this month, the biggest net sales were SK Square at 270 billion won, Samsung Electro-Mechanics at 252.5 billion won, Samsung Electronics at 142.8 billion won, and Samsung C&T at 67 billion won. As of the first half, the NPS held SK Square worth 19.792 trillion won, Samsung Electro-Mechanics worth 16.2388 trillion won, Samsung Electronics worth 153.185 trillion won, and Samsung C&T worth 6.5203 trillion won.
By contrast, several stocks saw increased weighting even though the fund already held large amounts. Pension funds and similar institutions net bought 94.8 billion won of Shinhan Financial Group this month, 55.9 billion won of Mobile Tactical Cannon program, 40.8 billion won of Kia, and 21.7 billion won of Samsung Biologics. In particular, they bought 46.8 billion won of SK hynix, the second-largest holding at 141.7143 trillion won.
Because the NPS has emphasized a slower pace for rebalancing, there has been no abrupt selling over a short period. Kim Sung-ju, chairman of the NPS, said on his personal social media account on the 1st, the first day of rebalancing, that "the NPS's rebalancing takes into account not only stock prices, but also volatility, interest rates and exchange rates," adding that "the possibility of it becoming a bomb is zero."
Brokerage analysts say excessive concerns that had already spread across the market hurt investor sentiment. They note that the NPS's rebalancing itself is being carried out on a scale that is unlikely to have a major impact on the market, while the recent decline was driven by increased foreign selling and then followed by reduced participation from individual investors.
Han Ji-young, a researcher at Kiwoom Securities, said, "With volatility rising, concerns have grown over the resumption of NPS rebalancing. However, the NPS said it would apply the allowable range for strategic asset allocation more flexibly in consideration of market shocks," adding that "the second-half rebalancing is expected to proceed gradually in line with market conditions."
Regarding the recent market correction, experts said concerns are spreading over a slowdown in the Artificial Intelligence (AI) industry, but no actual damage to earnings has occurred. Jo A-in, a researcher at Samsung Securities, said, "It is natural to see debate over overheated AI investment after this year's sharp short-term gains," adding, "However, I do not think the current AI investment cycle has peaked. Earnings reports from U.S. Big Tech later this month will be a key turning point."
[email protected] Lim Sang-hyeok Reporter