Input 2021.03.26 18:55
After the meeting, Minister of Health and Welfare Kwon Deok-cheol concluded, “There was a consensus on the necessity of reviewing the rules for maintaining the target weight (of domestic stocks), but more sufficient research and review are needed for the timing, scale, and degree of adjustment.” Explained why it was not possible.
Minister Kwon said, “After preparing enough information and data to judge the agenda and market conditions, we will discuss it again at the Fund Committee in April.” There is no set date for the April Fund Committee.
◇ If you raise the limit on domestic stock holdings, you can buy 11.65 trillion won more.
The issue of the fund committee meeting on this day was whether to raise the limit of national pension holdings in Korea. The national pension’s current target ratio of domestic stocks was 16.8%, and the allowable limit for strategic asset allocation was 2% points.
Strategic asset allocation is a management method that recognizes holdings up to a certain limit even if the share of the total assets becomes higher or lower than the target value due to changes in asset prices. In other words, the share of domestic stocks that the National Pension Service can hold was 18.8%, which was the target ratio plus the allowable limit for strategic asset allocation. Based on this calculation, the limit of domestic stocks that the National Pension could hold was only 15.97 trillion won.
At the end of last year, the national pension’s domestic stock was worth 176.7 trillion won. For this reason, in order to meet the target ratio, it has been selling in bulk since the beginning of the year. This year, the net sales of the national pension amounted to 15,949.7 billion won. This is believed to have had some impact on the stock market’s decline. The KOSPI index rose to 3266.23 (January 11) at the beginning of the year, but now it has fallen by more than 8%, moving sideways from the 3000 line.
As the volatility of the stock market increased in this year, voices from individual investors are increasing, calling for mass selling of the national pension system. The National Pension Service has also suggested the possibility of rebalancing the asset allocation method several times since a month ago, as if conscious of the criticism of’ants’.
It is known that the Fund Committee initially considered a plan to increase the allowable limit for strategic asset allocation from 2% points to 3~3.5% points. If this limit is raised to 3.5 percentage points, the domestic stock limit that the national pension can hold will be 20.3% of total assets, or 172.4 trillion won. Since the current national pension reserves are estimated to be worth about 16.75 trillion won, if the allowance for strategic asset allocation is increased to 3.5 percentage points, a total of 11.65 trillion won will be available by the end of the year.
◇ “Supporting the domestic stock market, it is not obligatory for the national pension”
However, experts in the securities industry agree that the national pension does not necessarily increase the holding limit of domestic stocks.
Song Hong-seon, a senior research fellow at the Capital Market Research Institute, said, “The National Pension Service has no choice but to use an investment strategy that prioritizes the interests of the fund.” said.
Researcher Song said, “Rather than what market participants say about the decline in the stock index, whether or not the selling amount of the National Pension Service undermines market neutrality will be the key (in discussions about rebalancing reorganization).”
Kim Byeong-deok, a senior research fellow at the Korea Financial Research Institute, also said, “It is necessary to hold some domestic stocks, but it is not the intrinsic obligation of the national pension to support the KOSPI index.”