The National Pension Service Knew: "Defending Returns Amid Concerns with Shopping Basket Replacement"

[Asia Economy Reporter Lee Seon-ae] The National Pension Service (NPS), a major player in the domestic stock market, has responded to changing market conditions this year by continuously reducing its holdings in securities stocks while increasing its stakes in food and beverage stocks. Market analysts have evaluated that by increasing the proportion of defensive stocks amid a frozen stock market due to interest rate hikes and economic recession, the NPS has successfully defended its returns.

According to the Financial Supervisory Service's electronic disclosure system on the 11th, the NPS has steadily increased its stake in CJ CheilJedang, the leading food and beverage company, this year. The shareholding ratio, which was 11.89% at the beginning of the year, expanded to 12.44% as of June 30. It also steadily accumulated shares in Lotte Chilsung Beverage, increasing from 7.89% on April 6 to 8.90% on June 27, and further to 9.28% in August. The stake in Daesang slightly increased from 11.25% as of March 31 to 11.89% as of June 30. Additionally, the NPS increased its holdings in fashion company F&F, which owns brands such as Hyundai Department Store, MLB, and Discovery. Hyundai Department Store's stake rose from 11.72% on March 31 to 12.11% as of June 30, and F&F's shareholding expanded from 5.26% on June 16 last year to 7.31% on June 20 this year.

On the other hand, the NPS continuously reduced its holdings in securities and financial stocks. DGB Financial Group's stake decreased from 12.90% at the beginning of the year to 11.59% in April, and further down to 10.57% as of June 30. It was lowered again to 10.27% in July. BNK Financial Group's shareholding dropped sharply from 12.22% on January 28 to 0.09% as of June 30, and was reduced to 9.95% in July. The stake in Korea Financial Group also declined from 9.38% on June 30 to 9.08% on July 18. Samsung Securities' shareholding was adjusted below 10%, decreasing from 11.29% at the beginning of the year to 9.96% on April 6.

The market interprets the NPS's diligent portfolio adjustments as the best strategy to defend returns. A financial investment industry insider said, "Although the NPS's domestic stock investment return was -7.7% through May this year, considering the overall market downturn, it can be seen as a relatively good performance. Reducing the proportion of securities stocks, which are expected to see overall earnings decline this year, and expanding defensive stocks amid growing recession concerns is a sufficiently rational investment decision actively responding to changing market conditions," he explained.

In fact, CJ CheilJedang, favored by the securities industry during inflation periods, has recently attracted attention as a stock with excellent price performance. Its stock price has risen 11.6% compared to the beginning of the year through the previous day. The securities industry has also pointed to the food and beverage sector as a promising industry with potentially high margin spreads during inflation periods. Conversely, securities stocks have plummeted. The operating profits of major domestic securities firms in the second quarter shrank to about half of the same period last year. Im Hee-yeon, a researcher at Shinhan Financial Investment, said, "Due to the sharp rise in interest rates, the burden of bond valuation losses is expected to continue," and advised, "Since the securities industry directly reflects the impact of stock and bond markets on net profits, a conservative approach to the securities sector is recommended."

There are voices advising to maintain a defensive stock investment strategy going forward. Lee Jae-seon, a researcher at Hyundai Motor Securities, emphasized, "Responding with sectors that are seeing upward earnings revisions and are defensive to the economy is likely to be a comfortable choice," adding, "Among defensive sectors, utilities, food and beverage, and healthcare are seeing upward revisions in their 12-month forward operating profit forecasts."

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