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Korean national pension fund to up investment in local shares

Collected: 2017.05.27

Distributed: 2017.05.29

Source: Go Direct

The decision by the National Pension Service (NPS), South Korea’s largest institutional investor, to up investment in local shares by around 15 trillion won ($13 billion) next year has helped to refuel the stock rally.

The pension fund said on Thursday its operating committee approved the adjustment of its investment portfolio - 27 percent in overseas securities and 73 percent in domestic securities - to respective share of 40 percent and 60 percent by 2020. But share in domestic stocks will be upped to 18.7 percent by the end of next year from 18.4 percent.

The news encouraged investors to buy more stocks, helping to push the Kospi to a fresh record high on Friday. The benchmark index closed 0.53 percent higher at 2,355.30.

Once its investment plans are realized, the pension service will have invested 122.6 trillion won in the domestic stock market by next year, up from 102.4 trillion won last year. Given its shareholding worth 107 trillion won, it has room to purchase additional 15 trillion won worth.

The pension fund aims to further identify sound investment sources overseas to meet the fresh portfolio target. The portion of foreign equity investment in the fund’s portfolio will be raised from 15.3 percent last year to 17.7 percent next year and further to 25 percent in 2022.

The pension fund also approved another market-friendly move of adopting stewardship code by the year-end to act more voting power in listed companies.

By Kim Hyo-hye

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