According to the National Pension Service on the 6th, a meeting of the Fund Committee, the highest decision-making body for the management of the national pension fund, will be held at The Plaza Hotel in Seoul on the 9th, and a plan to adjust the target weight by asset group (rebalancing) will be discussed.
Unlike the existing regular meetings, this fund committee will only discuss rebalancing measures. It is rare for the fund committee to discuss only a single agenda. Since the end of last year, the sale of pension funds has continued, and investors have criticized the mechanical operation of pension funds as preventing the index from rising.
Accordingly, on the 26th of last month, the Fund Committee proposed and discussed a rebalancing plan. At the time, the Fund Committee discussed ways to stop the net selling tax, which has been continuing since the beginning of this year, but decided to discuss it again at this month’s meeting due to differences of opinion among the fund members. At the time, members of the government agreed, but other members are known to have expressed opposition.
It is also expected that this meeting will focus on whether to increase the proportion of domestic stock holdings. The core of the rebalancing review plan is to expand the SAA allowance range for the National Pension Plan’s domestic stock share target of 16.8% this year from ±2% points to ±3~3.5% points. The total deviation allowance limit of ±5% points remains the same.
However, if the SAA range is wider than it is today, there will be room for the limit. Increasing the allowable range of SAA increases the proportion of stock assets as the domestic index rises, increasing the range of discretion instead of mechanically repeating selling as it is now. If the share price rise is not steep, it is expected that the National Pension Plan will be able to stop selling domestic shares.
According to the national pension medium-term asset allocation plan, etc., the share of domestic stocks in the entire fund should be reduced from 17.3% last year to 16.8% this year. However, at the end of last year, the national pension’s share of domestic stocks reached 21.2%. Pension funds such as the National Pension Service showed net selling for 15 consecutive trading days from the 17th of last month to the 5th of this month.
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