Immediately after the single election… Stop selling K shares of the National Pension Service again

On the 9th, the National Pension Service will re-implement a plan to stop selling domestic stocks. The discussion was held at the National Pension Fund Management Committee led by the government at the end of last month, but it was postponed as a controversy arose that he was conscious of the vote ahead of the Seoul-Busan mayoral by-election. However, it is pointed out that the government decided to open and enforce the’One Point’ Fund Committee right after the by-election instead of the regular Fund Management Committee at the end of this month.

According to the National Pension Service on the 6th, a review (rebalancing) plan will be discussed and resolved at the Fund Committee held on the 9th. It has been two weeks since it was put on hold on the 26th of last month due to opposition from private members.

This plan is to increase the allowable range of strategic asset allocation (SAA) within ±5% of the total allowable limit, from ±2% to ±3 to 3.5%, while keeping the domestic stock share target of 16.8% this year. If this agenda is passed, the allowable range of domestic stock SAA, which is currently 14.8-18.8%, will widen to 13.3-20.3%. As of the end of last month, the share of domestic stocks in the national pension was 19.1%. To fit within the current allowable range, the weight of the stock must be further reduced, but when the allowable range changes, there is no need to sell and additional purchases are possible.

The government’s expansion of the allowable range of stock investment in the National Pension System is due to increased resistance from individual investors. Pension funds such as the national pension net sold about 16 trillion won in the domestic stock market this year. If this plan is passed, it is expected to serve as a good news for the domestic stock market.

Some are criticized that the government and the ruling party ahead of the by-election are using the national pension as a tool to catch the vote of’Donghak ant’. The fund committee is usually held at the end of each month. It is extremely unusual to convene a separate meeting for a specific agenda.

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The government promotes the One Point Fund Committee

The government is pushing for the expansion of the allowable range of domestic stock investment by the National Pension Service. This is because it is judged that the sale of the national pension, which has continued since the end of last year, is an obstacle to stimulating the stock market. Some are interpreted that the government has set out to catch the vote of an individual investor called’Donghak ant’ ahead of the by-election of the mayors of Seoul and Busan on the 7th.

The National Pension Service held the Fund Management Committee (Fund Committee) at The Plaza Hotel in Seoul on the 9th to discuss the agenda to reconsider the’Regulations for Maintaining the Ratio of Targets for National Pension Fund Management’, which expands the scope of domestic stock investment. The main content is to expand the target range of domestic stock holdings, which is currently 14.8-18.8%, to 13.3-20.3%, and only this agenda will be intensively discussed on this fund.

This agenda was debated at the fund committee held on the 26th of last month, but it could not be concluded due to intense confrontation between the pros and cons. At that time, members of the government, including the Vice Minister of Strategy and Finance, who did not attend the meeting because of minimizing the government’s breath on the fund, participated and helped to pass the agenda. “In order to stabilize the domestic stock market, it is necessary to stop the mechanical sell-off of pension funds by expanding the range of investments allowed.”

However, other members of the funding committee objected. Many of the committee members emphasized that “considering the decrease in the amount of national pension management due to the increase in the retired population, selling domestic stocks is inevitable, and if the stocks are not sold now, the impact will be greater in the future. Both the Investment Policy Specialized Committee and the Practical Evaluation Committee, which are expert organizations that review the validity of the agenda, both expressed opposition. One member pointed out that “there is a need for some rebalancing to secure operational flexibility,” but pointed out that “it is inappropriate to abruptly change the long-term strategy of the National Pension Plan, conscious of the vote of Donghak ants.

Nevertheless, the government is pushing again because the sale of the national pension has not faded since the last meeting. Pension funds, with the national pension as the main axis, have been net selling domestic stocks for most of the period except for two days since December 24 last year. As of this year, the accumulated net sales amounted to 16 trillion won, and even after the fund committee last month, it net sold about 700 billion won.

There is also an interpretation that there is pressure from the ruling party in the background of the’One Point’ fund, which is held unusually inside and outside the national pension system. An official from the investment industry said, “It can be read with the aim of raising the approval rating of the ruling party ahead of the election by highlighting the fact that the’National Pension’s stock sale is about to end.’ Some believe that the government and the ruling party will leverage this rebalancing adjustment to expand the target weight of domestic stocks.

Reporter Hwang Jeong-hwan [email protected]