Back step to 3,080 KOSPI [사진제공=연합뉴스] – The domestic pension fund is recording net selling for 32 business days in a row in the domestic stock market, breaking the record longest. This is because the proportion of domestic stock investment out of the total investment capital must be adjusted to a certain level. As the stock price increases, the valuation increases, and when the proportion of investment increases due to the increased valuation, it is automatically sold to maintain the investment proportion.
Some of the originality that it is the main culprit in the stock price rise, but wise’ants’ all know it. Conversely, when the stock price falls sharply, the pension fund acts as a’shield’ to defend it. If the valuation decreases due to a fall in the stock price, and the proportion of investment decreases accordingly, the stock is mechanically repurchased to increase it.
According to the Korea Exchange on the 13th, among the investors, domestic pension funds net sold domestic stocks for 32 consecutive business days until the 10th of this month after December 24 last year, which was Christmas Eve.
During this period, pension funds sold a total of 11 trillion 2276 billion won in net sales of 10,813 trillion won in the KOSPI market and 4145 billion won in the KOSDAQ market.
During the period, the KOSPI index rose from 2759.82 to 3100.58, and the KOSDAQ index rose from 923.17 to 964.31, up 12.35% and 4.46%, respectively. Although pension funds have built a huge wall for sale, the stock index has risen. It wasn’t because of the pension fund that the stock price couldn’t rise, it was because the stock price rose.
If you look at this year’s fund management plan announced by the National Pension Fund Management Committee in May last year, you can guess the reason. The national pension plan is to reduce the share of domestic stocks from 17.3% at the end of 2020 to 16.8% at the end of 2021 and gradually reduce it to around 15% by the end of 2025.
Apparently, the share of domestic stocks has decreased, but the total investment volume has not decreased. The target amount for domestic stock investment by the end of 2020 is 13.7 trillion won, and the investment target amount by the end of this year is 142.5 trillion won, which is aimed to increase by about 4.8 trillion won. This is because new pensions paid by the people continue to flow as investment principals.
The problem is that the stock index rose sharply.
As of the end of November last year announced by the National Pension Service, the annual return on domestic stocks was 20.39%. At the end of November last year, the KOSPI index was only 2591.34. Since the end of November last year, the increase rate of the KOSPI index has reached 19.65% by the 10th of this month. Assuming that the valuation of domestic stocks held by the National Pension Service is the original target of 13.7 trillion won, a 10% increase in the stock price will spontaneously increase 13.77 trillion won. This is more than three times the amount of domestic stock net increase of 4.8 trillion won by the end of this year. This is why pension funds sell domestic stocks mechanically.
Conversely, if the stock price plummets, the National Pension System is forced to buy domestic stocks on its own. Whenever the stock price falls by 10%, the size of domestic stocks held by the National Pension Service decreases by KRW 13.77 trillion. In order to match the proportion of holdings, it is a structure to buy back stocks.
The opinion is that there are many positive aspects in that the nature of such pension funds reduces volatility in the domestic stock market.
[한우람 기자]
[ⓒ 매일경제 & mk.co.kr, 무단전재 및 재배포 금지]
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