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Pension funds extend stock selling streak to 42nd straight session

An aerial view of Yeouido, Seoul (Yonhap)
An aerial view of Yeouido, Seoul (Yonhap)
South Korean pension funds logged a record-long selling spree of local stocks, extending net selloffs to a 42nd consecutive session.

While the unloading trend extended during a recent market correction period, experts predict their selling will likely to continue at least until June this year.

The combined net sales of the pension funds came to 12.98 trillion won ($11.57 billion) so far this year. In February, they sold a net 4.58 trillion won -- 4.32 trillion won on the main bourse Kospi and 260 billion won on the tech-heavy Kosdaq, according to data compiled by the Korea Exchange.

The pension funds include major institutional investors such as the National Pension Service, Government Employees Pension Service, Teachers’ Pension and Korea Post.

Among the large-caps on the Kospi stock market, they sold shares of Samsung Electronics the most, offloading around 1.48 trillion won. Chemical giant LG Chem came next at 445.1 billion won, followed by Naver and Kia with 444.7 billion won and 250.9 billion won, respectively, while the No. 2 chipmaker SK hynix marked 248.1 billion won.

The pension funds, at the same time, bagged some of the Kospi-listed stocks with rosy growth outlooks. The nation’s No. 3 refiner S-Oil was the most-purchased stock, net-buying 125.3 billion won. Lotte Chemical held the second most at 82.8 billion won, leading telecom operator KT was followed by 64.7 billion won.

Market watchers say that the state-run National Pension Service offloaded the shares to balance out its investment in domestic stocks in its asset in its asset allocation. To cut back on local stock exposure to 16.8 percent by the end of this year, the public pension fund has to sell additional local shares worth 23.7 trillion won, the experts explained.

“The pension funds’ asset allotments in domestic stocks had increased, followed by the sharp rises in large-cap stocks in Kospi market at the beginning of this year. Since other assets such as bonds had given relatively lower returns than the local stocks, they had to quickly adjust asset portfolios,” said Noh Dong-kil, an analyst at NH Investment & Securities.

By Jie Ye-eun (