NPS revises asset allocation policy, raises hope for easing in stock selling

National Pension Service (NPS) is expected to ease up on its selling upon upward revision in the guidance on investment in domestic shares.

NPS’s fund operation committee on Friday voted in approval of upping the acceptable range of the strategic asset allocation (SAA) policy to plus or minus 3 points from previous 2 points.

As a result, the country’s largest institutional player can hold up to 19.8 percent of its assets in Korean shares, 3 percentage points up from preset domestic stock ratio of 16.8 percent for this year. The raise gives the fund a leeway of 7 trillion won ($6.2 billion).

The SAA policy refers to a portfolio strategy design in asset class allocation and rebalancing in the allocations. NPS with 866 trillion won assets under management operates according to its internal SAA policy with a preset permissible range. If its holdings in certain asset category exceed the range, the fund manager must divest the holdings to lower the weight.

NPS has been under scorn for its heavy selling and blamed for the stagnant stock prices after a stunning run fueled by retail investment.

NPS is estimated to have net sold 17.2 trillion won worth of stocks in the main Kospi and secondary Kosdaq so far this year. This is expected to have lowered the portion of Korean stock within NPS assets but only to around 20 percent.

It would have to offload 2 trillion more if the permissible range had not been revised up.

Korean stocks accounted for 21.2 percent of the fund manager’s asset portfolio at the end of last year. NPS has extended selling spree in Korean stock market for months to lower the portion.

“The latest decision does not lead to sudden change in investment from NPS,” said Lee Hyung-hoon, fund policy director at NPS.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]