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Pension fund lowers local stock investment guideline for 2018

All News 08:33 January 08, 2018

SEOUL, Jan. 8 (Yonhap) -- The National Pension Service (NPS) has lowered its local stock investment guideline for this year for an estimated 1 trillion won (US$939.4 million) available to purchase new stocks, officials said Monday.

The fund management committee of the NPS set this year's investment ratio at 18.7 percent compared with last year's 19.2 percent. The actual ratio as of end-2017 was 21 percent because the NPS has a 5 percentage-point leeway with the guideline.

"The stock investment guideline has been lowered, and the strong local stock market does not allow for much room to buy new shares," a NPS official said. "We will mostly be changing the portfolio rather than buying new stocks."

Recent data indicate that the NPS has been passive in buying stocks. Its 10-day purchase in the secondary KOSDAQ market from Dec. 20 came to 285.6 billion won, only about half of the 578.9 billion won by retail investors. Foreigners raked in 3.5 trillion won during the same period.

On the main KOSPI, foreigners bought 1.25 trillion won worth of stocks in the Jan. 2-5 period, compared with 956.8 billion won sold by institutions. The NPS sold 45.5 billion won worth of shares during the four days.

Portfolio adjustments have been expected as the government is scheduled to announce this week steps to activate the KOSDAQ market, including more investment by the NPS.

Financial market watchers, however, predict that such measures will be limited in making major portfolio changes at the pension fund. Ninety-eight percent of NPS-held stocks are in the main KOSPI market because the fund management committee set it as the benchmark index and limits high-risk investment to 2 percent of total assets.

The committee is set to meet next week to draw up this year's management strategies, but with its chairman's post still vacant, watchers say any immediate investment changes are unlikely.

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