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The Seoul Northern Regional Headquarters of the National Pension Service in Seodaemun-gu, Seoul. (Photo: Yonhap) |
[Alpha Biz= Kim Jisun] South Korea’s National Pension Service (NPS) has decided to increase its domestic equity investment allocation by 0.5 percentage points this year, while temporarily suspending automatic rebalancing trades that adjust the ratio between domestic and overseas equities. The move is widely interpreted as an effort to ease concerns over stock market pressure caused by NPS-driven sell-offs and to help support the domestic equity market.
The NPS Fund Management Committee on Jan. 26 convened its first meeting of 2026 at the Government Complex Seoul and approved a plan to improve the fund’s portfolio structure. The committee is the highest decision-making body on major matters related to NPS fund management. Holding the meeting in January—rather than the usual February or March—marks the first such occurrence in five years.
Under the decision, the target allocation for domestic equities as of the end of 2026 will be raised from 14.4% to 14.9%. In contrast, the target allocation for overseas equities will be reduced by 1.7 percentage points, from 38.9% to 37.2%.
The committee also agreed to temporarily suspend rebalancing trades even if asset allocations deviate from the allowable range under the Strategic Asset Allocation (SAA) framework. Previously, if allocations moved beyond the permitted ±3 percentage point range due to market fluctuations, automatic buying or selling was triggered.
The decision reflects concerns that simultaneous selling of domestic equities and buying of overseas equities could place undue pressure on both the local stock market and the foreign exchange market. The sharp growth of the NPS fund—now valued at approximately KRW 1,438 trillion, nearly double its size in 2019—was also taken into consideration.
“The continuation of rebalancing amid heightened market volatility could have an excessive impact on the market,” the committee said, adding that sharp short-term fluctuations in both equity and currency markets make it difficult to accurately assess market conditions and set appropriate asset allocation benchmarks.
Market participants note that President Lee’s recent remarks may have influenced the decision. During a briefing on NPS operations late last year, President Lee pointed out that rising domestic stock prices had pushed the NPS’s equity holdings above their limits and called for a review of the domestic equity allocation.
The move is being viewed as a policy signal aimed at easing selling pressure from the NPS, supporting the domestic stock market, and encouraging capital that has flowed into overseas equities to return to the Korean market.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
