Buying Even During a Plunge... Slipped 22%, When Is 'Rebalancing'?

The National Pension Service (NPS) actively engaged in buying the dip by net purchasing nearly 1 trillion won worth of stocks during last month's plunge in the KOSPI, data showed.

Concerns had risen in the market that the NPS might resume rebalancing starting last month and trigger aggressive selling, but there was no "dumping of shares."

According to the Korea Exchange, public pension funds net purchased 990.5 billion won worth of stocks in the KOSPI market last month.

Most of this volume is estimated to be from the National Pension Service.

From the 1st to the 27th of last month, pension funds recorded a net selling of less than 10 billion won, maintaining a virtually neutral trading stance.

However, from the 28th, when circuit breakers were triggered for an unprecedented two consecutive days, through the end of the month, they net purchased 999.6 billion won.

They scooped up 116.5 billion won worth of stocks on the 28th when the KOSPI plummeted by over 10%, 338.0 billion won on the 29th when it fell by over 5%, and 380.7 billion won on the 30th when it dropped further by over 1% down to the 5,500 level.

Even on the 31st of last month, when the index recorded its largest-ever surge with a 17.92% jump, they net purchased 164.4 billion won.

This means they swept up the vast majority of their monthly net purchases during the final four days of the month.

Typically, pension funds rebalance their portfolios by realizing profits when the market overheats and buying assets when they are undervalued.

However, as the KOSPI soared from the beginning of this year, the National Pension Fund Management Committee decided last January to temporarily defer rebalancing until June.

As a result, the National Pension Service's proportion of domestic equities soared to 29.4%, nearly double its target allocation.

As the KOSPI surge continued and briefly soared to the 9,300 level during intraday trading, investors raised the possibility that pension funds might sell.

However, reflecting concerns that large-scale stock selling could burden the market, the pension fund deferred selling, and as the KOSPI plummeted by about 22% to the 6,595 level by the end of July, its domestic stock weight naturally declined.

Experts forecasted that the pension fund, which has 80 trillion won in remaining purchasing capacity, will continue its buying streak centered around tech stocks.

Reported by Kim Jiuk | Video by Jang Yujin | Graphics by Lee Jeongju | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.