The market value of the service’s holdings fell 182 trillion won ($136 billion) in three and a half months, with much of the investment concentrated in chipmakers.
The National Pension Service’s (NPS) earlier decision to increase domestic equity investments is backfiring hard, with the state pension management taking a major hit from the latest stock market plunge.
As of mid-October, the market value of the NPS’s disclosed stock holdings has fallen by more than 182 trillion won ($136 billion) in just three and a half months, marking its first decline in seven quarters. More than 70 percent of the drop was concentrated in Samsung Electronics and SK hynix, highlighting the risks of the pension fund’s heavy exposure to semiconductor stocks.
The market value of shares held by the pension service in 287 listed companies in which it disclosed stakes of at least 5 percent stood at 333.53 trillion won as of Thursday, according to data available on market tracker FnGuide. That was down 182.4 trillion won, or 35.3 percent, from 515.93 trillion won at the end of June. It marked the first quarterly decline since the fourth quarter of 2024 and the largest quarterly drop on record.
The value of the NPS’s holdings in SK hynix fell by 74.23 trillion won, while its Samsung Electronics holdings lost 56.87 trillion won in value. Together, the two stocks accounted for 131.1 trillion won, or 71.8 percent, of the total decline. Including SK hynix’s largest shareholder SK Square, which saw a decrease of 10.87 trillion won, and Samsung Electro-Mechanics, down 7.59 trillion won, the combined decline reached 149.56 trillion won. These four stocks accounted for approximately 82 percent of the total decrease.
The fund’s growing dependence on a handful of stocks has emerged as a key concern. The two chipmakers accounted for 40.4 percent of the NPS’s domestic equity assets at the end of March, but their combined share had risen to 55.7 percent by July 6. The concentration in semiconductor stocks, which boosted returns during the market rally, amplified the decline when the market turned downward.
Criticism has also resurfaced over the NPS’s asset allocation strategy. In January, the fund management committee temporarily suspended the rebalancing of domestic equity holdings. It also raised its target allocation for domestic stocks from the original 14.4 percent to 14.9 percent in January and then to 20.8 percent in May. The actual proportion of domestic equities surged to 29.1 percent by the end of June. Although the NPS resumed rebalancing in July, the subsequent stock market plunge sharply reduced the value of its holdings.
By company, the NPS increased its stake in GS Engineering & Construction from 7.82 percent to 12.88 percent, Hyundai Marine & Fire Insurance from 9.42 percent to 12.37 percent and Binggrae from 6.47 percent to 9.37 percent. Meanwhile, it reduced its holdings in Paradise from 12.33 percent to 8.39 percent and Samsung Biologics from 10.27 percent to 6.56 percent. The fund also newly disclosed stakes of at least 5 percent in 17 companies, including Xi S&D, PharmaResearch and Korea Zinc.
Still, some holdings gained value. The market value of the NPS’s stake in SK Innovation rose by 904.1 billion won, supported by an increase in its ownership from 6.03 percent to 7.14 percent and a rise in the company’s share price. The service’s holdings in S-Oil recorded an increase of 710.7 billion won, followed by LG Energy Solution with 580.8 billion won and Hanwha Solutions with 434.7 billion won.
Of the 84 companies in which the NPS increased its stakes, seven were listed on the secondary Kosdaq market. In contrast, 21 of the 82 companies in which it reduced its holdings were Kosdaq-listed firms.
The NPS’s decision to suspend rebalancing was intended to minimize market disruption from large-scale stock sales, NPS Chairman Kim Sung-joo explained during a parliamentary audit Wednesday.
“If the fund management committee had followed the rules in January without suspending rebalancing, we would have had to sell more than 800 billion won worth of stocks every day, which is equivalent to more than 10 percent of the Kospi’s trading value and would have caused enormous disruption to the market,” Kim said.
The opposition, however, raised concerns about the consistency and transparency of the fund’s investment management principles.
“We need to determine whether the decision was made with the public’s retirement security in mind or to suit the government’s preferences,” said Rep. Kim Tae-ho of the main opposition People Power Party.
BY PARK YU-MI [yoon.soyeon@joongang.co.kr]
