Korea's NPS turns net buyer with KRW 68.4 billion KOSPI buy

The KOSPI's 21% decline since late June erased the need for forced selling, as the National Pension Service recorded its first net purchase of domestic stocks in seven months.

"Large-scale selling cannot occur in the short term," Kim Sung-joo, chairman of the National Pension Service, said in a statement, pushing back against market speculation that the fund would need to dump as much as KRW 74 trillion of equities to rebalance its portfolio.

Pension funds net bought KRW 68.4 billion ($46.8 million) on the KOSPI from July 1-24, according to Korea Exchange data. That compares with net selling of KRW 2.34 trillion in June and KRW 2.16 trillion in May, as the funds had sold domestic stocks every month this year. SK Hynix Inc. was the top purchase at KRW 425.8 billion, while SK Square Co. saw the largest net selling at KRW 575.7 billion.

The shift removes a major overhang that had weighed on the KOSPI, which fell 21% from its June 30 close of 8,476.48 to 6,690.62 on July 24. With foreign investors continuing to pull capital from Korean equities and retail investor deposits declining 25% from a record high in early June, the pension fund's buying provides a critical support layer for a market that had been bracing for the opposite.

KOSPI's Decline Reshapes Rebalancing Math

The National Pension Service had raised its target allocation to domestic equities to 20.8% in May after the KOSPI nearly doubled from around 4,300 at the start of the year to above 9,000 in mid-June. That triggered expectations that the fund would need to sell as much as KRW 74 trillion to bring its actual holdings in line with the new target after a temporary rebalancing exemption expired at the end of June.

Instead, the KOSPI's sharp correction did the work for them. The index's 21% slide reduced the market value of the NPS's domestic stock holdings, lowering their share of total assets and reducing the need for additional selling. Securities industry analysts said the decline also created opportunities to buy quality stocks at lower prices.

Semiconductor and Energy Stocks Gain, Samsung Affiliates Sold

The buying pattern reveals a clear sector rotation within the pension fund's portfolio. SK Hynix received KRW 425.8 billion in net purchases, making it the top pick for the second consecutive month. SK Innovation and S-OIL, both energy-related stocks, followed with KRW 224.7 billion and KRW 174.4 billion in net buying, respectively. DB Insurance and Celltrion rounded out the top five.

On the selling side, Samsung Group affiliates dominated. SK Square was the most sold stock at KRW 575.7 billion, followed by Samsung Electro-Mechanics at KRW 313.6 billion, Samsung Life Insurance at KRW 123.8 billion, and Samsung Electronics at KRW 111.5 billion. The divergence between SK Hynix and Samsung Electronics — both major semiconductor plays — reflects a preference for memory chip exposure tied to artificial intelligence demand rather than the broader Samsung conglomerate structure.

The buying comes as domestic retail investors have been rotating out of the KOSPI and into U.S. stocks. Net purchases of U.S. equities reached $2.6 billion in the first 24 days of July, four times the June total, with the Direxion Daily Semiconductor Bull 3x ETF and SK Hynix's American Depositary Receipts among the top picks.

This article is for informational purposes only and does not constitute investment advice.