‘Big Player’ Pension Funds Selling for 5 Consecutive Months... NAVER Tops Net Buying in Second Half

Net Selling Worth 2.51 Trillion KRW from April to This Month
Samsung Electronics Sold the Most... Amorepacific and Korean Air Among Buyers

The pension funds, major players in the stock market, have been reducing their stock holdings for five consecutive months. The expectation of an interest rate cut within the year, which was valid at the beginning of the year, faded during the second quarter, leading to a continued 'sell' mode.

According to the monthly trading performance of pension funds compiled by the Korea Exchange Information Data System on the 29th, selling dominated for five consecutive months from April to this month. During this period, pension funds net sold a total of 2.51 trillion KRW worth of stocks. Looking at the monthly net selling scale, it increased continuously through the second quarter with 224 billion KRW in April, 347 billion KRW in May, and 784 billion KRW in June. This month, they also sold 746 billion KRW (accumulated from August 1 to 28).

The stock most sold by pension funds was Samsung Electronics, the 'leader of KOSPI,' with a total net sale of 946 billion KRW since the beginning of the year. Samsung Electronics' stock price, which approached the '100,000 KRW mark' in January 2021, had been sluggish for about two years but rebounded in the first half of this year, prompting pension funds to reduce their holdings by selling. Following Samsung Electronics, POSCO Holdings, whose stock price more than doubled compared to the end of last year, ranked second in pension fund net sales with 742 billion KRW. SK (216 billion KRW), EcoPro (212 billion KRW), and Meritz Financial Group (211 billion KRW) also ranked high among the stocks heavily sold by pension funds.

Pension funds recorded net purchases in January and March. Supported by foreign investors' buying momentum, the KOSPI also showed an upward trend, and most importantly, the expectation of an interest rate cut within the year was still alive. However, as the U.S. Federal Reserve (Fed) maintained a hawkish stance due to persistent high inflation during the second quarter, pension funds appeared to turn conservative by reducing their stock holdings. Institutional investors, including pension funds, sold a total of 12.333 trillion KRW this year. Foreign investors, who showed record-high buying momentum in the first half, also turned to selling in the second half (net 364 billion KRW accumulated since July 3).

Ultimately, the timing for expanding stock holdings by institutions, including pension funds, depends on the resolution of uncertainties in macroeconomic indicators such as inflation and interest rates. Gong Dong-rak, a researcher at Daishin Securities, said, "The Fed's core concern remains inflation, and since it has confirmed its stance to continue monetary tightening until inflation aligns with the target level, this Jackson Hole meeting itself was hawkish." However, he added, "Since major price variables were pre-reflected in the market in anticipation of last year's sharp shock, the impact on the market is expected to be neutral or limited." He advised, "However, regarding interest rates, since supply and demand burdens persist, it is necessary to prepare for additional volatility risks regardless of this Jackson Hole meeting."

While pension funds have generally reduced their positions in the stock market, they continue to show differentiated buying momentum by stock. Since the second half of this year (accumulated since July 3), the stock most purchased by pension funds is Naver (NAVER), with a total net purchase of 225 billion KRW. Naver, whose stock price had been sluggish for the past two years, has recently attracted investor expectations by launching the generative AI model 'HyperCLOVA X.' Jeong Ho-yoon, a researcher at Korea Investment & Securities, evaluated Naver's recent HyperCLOVA X conference, saying, "It was positive that the conference did not merely focus on technical explanations but presented a relatively clear blueprint on how to generate revenue from generative AI and improve existing services such as search and shopping." However, he pointed out, "The remaining challenge is performance," adding, "It will take considerable time and performance verification to fully realize the blueprint."

Recently, as the Chinese government decided to resume visits by Chinese tourists (Youke) to Korea, stocks related to cosmetics, hotels, airlines, and duty-free shops such as Amorepacific (108 billion KRW), Korean Air (105 billion KRW), Hotel Shilla (91 billion KRW), and Hyundai Department Store (59 billion KRW) also ranked high in pension fund net purchases.

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