① South Korea's pension fund agency net purchased 68.4 billion won in KOSPI stocks from July 1 to 24, reversing a continuous net selling trend in the first half of the year;
② Funds were primarily net purchased in SK Hynix, while the top three net sold stocks were SK Square, Samsung Electro-Mechanics, and Samsung Life Insurance;
③ The anticipated 74 trillion won sell-off did not materialize, as the pension fund took advantage of the stock market correction to buy on dips.
Caixin Global, July 27 (Editor Li Ying) As a heavyweight institutional investor in South Korea's stock market, the National Pension Service (NPS) has entered a rebalancing window. However, the feared large-scale sell-off did not occur. Instead, the pension fund net purchased Korean stocks countercyclically, focusing on chip giant SK Hynix, while several Samsung-affiliated companies appeared on the top net selling list.
According to data released by the Korea Exchange on the 26th, from July 1 to 24, South Korean pension agencies, including the NPS, accumulated a net purchase of 68.4 billion won in the KOSPI market.
In contrast, during the first half of this year, pension agencies were net sellers of Korean stocks every month — 1.8911 trillion won in January, 681.6 billion in February, 764.8 billion in March, 896.1 billion in April, 2.1617 trillion in May, and 2.337 trillion in June — totaling nearly 8.7 trillion won in net selling over six months.
SK Hynix Tops the List for Two Consecutive Months
Topping the net purchase list was SK Hynix, with a net purchase amount of up to 425.8 billion won in a single month. Last month, SK Hynix was also the stock with the largest net purchase by pension agencies.
Second on the list was SK Innovation, an energy company under the SK Group, with net purchases of 224.7 billion won. Refinery S-Oil ranked third with 174.4 billion won, followed by property and casualty insurer DB Insurance (109.4 billion won), biopharmaceutical company Celltrion (95.3 billion won), and Korean Air (89.9 billion won) in the top six.
Samsung Affiliates Account for Three of the Top Five in Net Selling
The stock with the largest net selling amount was SK Square, the tech investment holding platform of SK Group and the largest shareholder of SK Hynix, with a net sell-off of up to 575.7 billion won in a single month.
The second, third, and fifth positions on the list were all taken by Samsung Group affiliates: second place Samsung Electro-Mechanics (net sold 313.6 billion won), third place Samsung Life Insurance (123.8 billion won), and fifth place Samsung Electronics (111.5 billion won). Fourth place was LG Innotek (111.9 billion won), an optical and semiconductor component manufacturer.
Industry insiders pointed out that the pension agencies' concentrated selling in July targeted the core listed entities of South Korea's two most systemically influential groups — Samsung and LG.
Why Did the 74 Trillion Won Sell-Off Fail to Materialize?
Markets widely expected in early July that a "sell-off wave" potentially reaching 74 trillion won would begin as the NPS's domestic stock rebalancing moratorium ended at the end of June.
The rebalancing moratorium is a temporary exemption rule for the NPS. During this window, even if domestic stock holdings exceeded their target, the fund was not required to mechanically reduce holdings to revert to the target proportion.
Industry insiders noted that the logic behind this expectation was not complicated. The NPS sets target allocation weights for each asset class to prevent excessive concentration of funds in specific assets, aiming to stabilize long-term returns.
Given the sharp rise in South Korea's stock market this year, the weight of domestic stocks has far exceeded the target, and the most direct way to achieve rebalancing would be to sell domestic stocks and buy under-allocated assets. However, the market did not see the anticipated "stampede selling" — there were only six trading days with net selling in July.
A securities industry professional said:
"The recent sharp market correction has lowered the valuation of Korean stock assets, which likely alleviated some of the pressure on the NPS to rebalance its portfolio. With the market experiencing a sharp decline, the pension fund may also take the opportunity to buy stocks on dips."
In short, the stock index correction narrowed the pension fund's overweight position, reducing the pressure to cut holdings. Combined with opportunities for bargain hunting, these two factors collectively defused the selling crisis, shifting funds from concentrated selling as anticipated to active buying.
Industry insiders pointed out that what South Korea's stock market experienced was not a liquidity shock driven by pension funds, but a structural reallocation with deep participation from pension capital.
