South Korea’s largest institutional investor National Pension Service (NPS) is mulling to invest extra 8 trillion won ($7 billion) in local equities this month and the next to help defend the local market hurt by political impasse from unprecedented power-abuse scandal on top of fears about the repercussions from the result of U.S. presidential election and likely rate hike in December.

The investment also provides a good bargain-hunting chance for the institutional major, said Kang Myun-wook, chief investment officer of NPS, in an exclusive interview with the Maeil Business Newspaper.

In principle, the pension is capable of investing up to 108 trillion in local bourse this year. “We could up investment based on market and fund conditions,” he said.

According to the fund management outline for 2016, the fund has allocated 20 percent for domestic stock investment. The 20 percent makes up 108.6 trillion won in its total reserves of 543 trillion as of the end of August. The fund spent 100 trillion won in local stocks as of the end of October.

The extra NPS fund could be a huge relief with the market fearing exodus of foreign funds ahead of the U.S Federal Reserve rate meeting next month. The political upheaval also has scared investors away.

According to the Korea Exchange (KRX), overseas investors sold off 166.8 billion won worth of local stocks from November 1 to 3, a reversal from their record-long buying streak that had led their net purchase of local stocks to top 10 trillion won until last month. Their sell-off worth more than 2 trillion won over the last three days in the local futures market has triggered synchronized action from retail investors.

NPS plans to invest 1 trillion won in the domestic market within this month after choosing three operators to manage investment in small- and mid-cap stocks, value stocks and Active Quant.

By Choi Jae-won and Jung Woo-sung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]