South Korea's National Pension Service and other pension funds net purchased 105 billion won in Korean stocks during July as the KOSPI index crashed more than 2,400 points. On July 28, pension funds bought 113.5 billion won worth of stocks as the KOSPI plunged over 10 percent. NPS Chairman Kim Seong-ju maintained the fund's long-term investment approach amid market volatility and dismissed allegations that the pension fund artificially boosted stock prices before local elections. The allegations emerged after President Lee Jae-myung questioned whether NPS increased domestic stock purchases to support markets ahead of the June 3 nationwide local elections.
Pension Funds Net Purchase 105 Billion Won During July KOSPI Crash
According to the Korea Exchange on July 28, pension funds and related entities net purchased 105 billion won in the KOSPI market from July 1 through July 28. The category "pension funds, etc." includes the National Pension Service, other public pension funds, mutual aid associations, and national and local government transactions.
On July 28, when the KOSPI index fell more than 10 percent, pension funds net purchased 113.5 billion won. Earlier in the month on July 1, pension funds recorded their largest net selling of 218.2 billion won. On July 14, they net purchased 86.8 billion won, while on July 22 and July 27, they net sold 70.7 billion won and 72.3 billion won respectively.
Market observers suggested NPS refrained from profit-taking during the stock market decline due to concerns about amplifying volatility. Some analysts noted that volatility caused by single-stock leveraged ETFs made it practically difficult for NPS to realize short-term gains even during market crashes. The concern was that if NPS rapidly reduced its domestic stock holdings, it could heighten market volatility already elevated by single-stock leveraged ETFs.
NPS Chairman Denies Election-Related Stock Manipulation Allegations
The appropriateness of NPS's strategic ambiguity, including its decision in May to not disclose the upper limit of domestic stock holdings, came under scrutiny as stock prices surged then crashed in the short term. Opposition parties criticized that public pension funds were mobilized to boost domestic stock prices for political purposes ahead of the June 3 nationwide local elections.
President Lee Jae-myung raised the issue during a work report at the Blue House on July 16 with the Ministry of Finance and Economy, National Data Office, Financial Services Commission, and Ministry of Planning and Budget. Lee asked, "There are rumors that you bought a lot of domestic stocks to raise stock prices because of the local elections. Did you actually purchase domestic stocks before the election?"
Chairman Kim responded, "That is not the case at all," dismissing the election-related stock price manipulation allegations. Kim explained, "We did not specifically buy or sell more. The valuation increased because the KOSPI index went up. We are also investors and need to make profits to return pensions to the people, but too much attention is focused on us, which creates difficulties in calm pension management."
Kim Seong-ju Reaffirms Long-Term Investment Principles
On July 22, Chairman Kim posted on social media under the title "Everything Leads to... National Pension?" He wrote, "Especially in times like these when the market fluctuates significantly with high volatility, we will not be swayed day by day but will maintain our investment principles based on a long breath and long-term perspective as long-term investors."
The statement reinforced NPS's commitment to its established investment strategy despite short-term market turbulence and political scrutiny.
FAQ
How much did Korean pension funds buy during the July KOSPI crash?
Pension funds net purchased 105 billion won in Korean stocks from July 1 through July 28 as the KOSPI index crashed more than 2,400 points. On July 28 alone, when the KOSPI fell over 10 percent, pension funds bought 113.5 billion won worth of stocks.
Did the National Pension Service buy stocks to boost prices before local elections?
NPS Chairman Kim Seong-ju denied allegations that the pension fund purchased stocks to artificially boost prices before the June 3 local elections. Kim stated that the valuation increased because the KOSPI index went up, not due to specific additional buying or selling activity related to the election.
