Korean Stock Market 'Big Player' Pension Funds Sold Samsung Electronics and Bought LG Energy Solution

Pension Funds Buy LG Energy Solution Shares Worth 2.5 Trillion Won
Meanwhile, Samsung Electronics, LG Chem, Naver, and Kakao Shares Sold

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Examining the stocks traded by pension funds, considered the 'big players' in the Korean stock market, since the end of last year reveals that they have massively purchased LG Energy Solution while significantly selling off Samsung Electronics, LG Chem, Kakao, and others.

Since LG Energy Solution's listing date, pension funds have bought more than 2.5 trillion KRW worth of this stock.

According to the Korea Exchange on the 13th, pension funds led by the National Pension Service have net purchased approximately 2.5141 trillion KRW over 9 trading days from last month's 27th, when LG Energy Solution was listed, until the 11th of this month.

During the same period, the total net purchase amount by pension funds in the entire KOSPI was 1.5459 trillion KRW, meaning they bought over 1 trillion KRW more in LG Energy Solution alone than their total KOSPI purchases.

Additionally, the second most net purchased stock by pension funds during this period was Kakao Pay, with purchases worth 73.5 billion KRW, which is only 2.9% of the amount spent on LG Energy Solution.

Pension funds purchased 2.1085 trillion KRW worth of LG Energy Solution stock on the listing day alone.

LG Energy Solution, the largest IPO, closed on its listing day at 505,000 KRW, 68.33% higher than the public offering price of 300,000 KRW, instantly becoming the second largest company by market capitalization on the KOSPI.

Since then, the stock price has fluctuated between 400,000 and 500,000 KRW, closing at 482,000 KRW on the 11th.

Based on the net purchase amount divided by the quantity (4,833,793 shares) so far, the estimated average purchase price of LG Energy Solution by pension funds is 520,112 KRW, indicating a loss of about 7%.

On the morning of the 27th, Kwon Young-soo, CEO of LG Energy Solution, who attended the KOSPI new listing ceremony of LG Energy Solution held at the Korea Exchange in Yeouido, Seoul, is striking a drum to commemorate the listing. Photo by Kang Jin-hyung aymsdream@

To buy LG Energy Solution, pension funds focused on selling large-cap KOSPI stocks around the listing date.

From December 7 last year, when LG Energy Solution submitted its securities registration statement and began the listing process in earnest, until the 11th of this month, pension funds net sold Samsung Electronics worth 1.2414 trillion KRW.

They also showed net selling dominance of over 200 billion KRW in LG Chem (415.9 billion KRW), Kakao (313.6 billion KRW), SK Hynix (299.2 billion KRW), and Naver (222.7 billion KRW).

The combined net selling amount of these five large-cap stocks by pension funds over about two months totals 2.4928 trillion KRW, roughly matching the amount spent on LG Energy Solution so far.

This portfolio adjustment is necessary because pension funds such as the National Pension Service must align their domestic stock management with the KOSPI 200 index, which they use as a benchmark (reference return rate).

To include LG Energy Solution, a mega-cap stock with a market capitalization exceeding 100 trillion KRW, they inevitably have to sell other large-cap KOSPI stocks in their existing portfolio.

The KOSPI 200 allows early inclusion if a newly listed stock's 15-day average market capitalization ranks within the top 50 of the KOSPI, making LG Energy Solution's early inclusion highly likely.

This content was produced with the assistance of AI translation services.