South Korea’s National Pension Service, the country’s largest institutional investor, has come to the rescue of the local stock market, suffering extreme volatility triggered by the US tariffs rollercoaster.
According to the Korea Exchange (KRX), Korean pension funds, led by the NPS, have made net purchases totalling 5.55 trillion won ($3.9 billion) in Korean stocks year to date.
They spent over 1.5 trillion won each month in the first four months of this year, with the exception of March, when net buying dropped to 200.2 billion won.
Last Monday, when the Korean stock market plunged due to the US tariff chaos, they net purchased 425.3 billion won worth of Korean shares, their second-largest daily net-buying value in five years.
When the country’s benchmark Kospi index dipped below a psychologically important level of 2,500 on April 3, they also net bought 273.4 billion won worth of local shares.
The NPS appeared to have wielded most of the power to stabilize the market this year, considering that its assets under management make up the lion’s share of the country’s entire pension fund AUM, and its asset allocation to stocks is much higher than that of other pension funds.
“In a bearish market, the NPS typically increases its exposure to large-cap, high-volume stocks,” said Frism Investment Advisory Inc. CEO Hong Chun-uk.
“Fund managers hired by the NPS appear to have actively cherry-picked blue-chip stocks that are less exposed to US tariff risks during market pullbacks.”
CHIP, BIO, DEFENSE AND SHIPBUILDING STOCKS ARE TOP PICKS
Korean pension funds gobbled up large-cap chip, bio, shipbuilding and defense stocks when they fell this month.
In the first two weeks of April, they net bought 260.7 billion won worth of Samsung Electronics Co. shares and 79.6 billion won worth of SK Hynix Inc., marking their No. 1 and No. 4 top picks during their declines.
Pension funds also scooped up 130.1 billion won worth of Samsung Biologics Co., seen as less exposed to U.S. trade policies due to its European market focus, along with 110.6 billion won worth of Korea’s No. 1 shipbuilder HD Hyundai Heavy Industries Co. and 64.6 billion won worth of the country’s leading defense stock Hanwha Aerospace Co.
According to the Financial Supervisory Service’s regulatory filing system, the NPS in the first quarter expanded its holdings in retail and F&B stocks expected to benefit from the Korean government’s anticipated supplementary budget worth tens of trillions of wons.
Its stake in E-Mart Inc., Hyundai Department Store Co. and Orion Holdings Corp. rose to 12.58% from 10.01%, to 11.45% from 10.03% and to 10.63% from 10.53%, respectively.
Its holdings in BNK Korea Investment Holdings Co., BNK Financial Group Inc., LIG Nex1 Co. and STX Engine Co. also increased to 10% or more, each.
BUYING POWER WANES
However, following its aggressive buying spree in early 2025, the NPS is approaching its upper limit for domestic equity investments.
Its asset allocation for Korean stocks is capped at 13% through 2029.
As of April 7, the NPS’s domestic stock holdings had already reached 12.7%, according to Seoul-based market research firm Research Arum.
With limited room for further stock purchases, Research Arum cautioned that the Korean equity market may face significant selling pressure once the NPS steps back.
By See-Eun Lee
see@hankyung.com
Sookyung Seo edited this article.
