Pension funds in South Korea net purchased 15 billion won in the KOSPI market from July 1 to July 28 (2:51 PM) despite the index plummeting 2408.81 points, according to Korea Exchange data released on July 28. The National Pension Service (NPS), the country's largest institutional investor and core component of pension fund flows, maintained its long-term investment principle during the volatility. NPS Chairman Kim Sung-joo previously stated the fund would not be swayed by short-term price fluctuations, a stance tested as KOSPI fell 28.42% during the period to close at 6067.67 on July 28.
Pension Funds Net Buy 15 Billion Won Amid KOSPI 28% Decline
According to Korea Exchange, pension funds (including NPS, public pensions, mutual aid associations, and national/local government transactions) net purchased 15 billion won in the KOSPI market from July 1 to July 28 at 2:51 PM. During the same period, individual investors net bought 17.98 trillion won, while foreign investors net sold 17.90 trillion won and institutional investors net sold 1.10 trillion won. The KOSPI index stood at 6067.67 at that time, down 2408.81 points (28.42%) for the month. On July 28 alone, the index crashed 688.08 points (10.19%).
Trading Data Shows Mixed Investor Behavior in July
Pension funds recorded their largest net sell on July 1 at 218.2 billion won and their largest net buy on July 14 at 86.8 billion won. On July 22 and July 27, pension funds net sold 70.7 billion won and 72.3 billion won respectively. On July 28, as KOSPI plunged over 10%, pension funds were net buying 23.5 billion won.
Market observers suggested NPS may be withholding profit-taking to avoid amplifying volatility during the sharp decline. Questions arose about the appropriateness of NPS's strategic ambiguity approach, including its May decision to keep domestic stock holding limits undisclosed. Opposition politicians criticized the timing as politically motivated ahead of the June 3 local elections, alleging retirement funds were mobilized to prop up domestic stock prices.
Kim Sung-joo Denies Election-Driven Stock Buying Allegations
President Lee Jae-myung questioned NPS about election-related stock buying allegations during a July 16 government briefing at the Blue House. "There are rumors that domestic stocks were heavily purchased to boost prices because of local elections," Lee said. "Did you actually buy domestic stocks before the election?"
Kim Sung-joo responded: "Not at all. We did not specifically increase buying or selling. The value increased because the KOSPI index rose. We are also investors and need to generate returns to provide pensions to the public, but the excessive attention creates difficulties in calm pension management."
NPS Maintains Long-Term Investment Principle During Market Crash
On July 22, Kim posted on social media under the title "Everything leads to... National Pension?" stating: "Especially during times like these when the market experiences high volatility with large fluctuations, we do not get caught up in daily ups and downs. As long-term investors, we maintain our investment principles based on a long breath and long-term perspective."
On July 1, Kim stated: "The National Pension is not an institution that sells immediately after prices rise to realize profits or buys immediately when prices fall. I ask that you not be swayed by claims from some experts or media reports that excessively stoke fear by mentioning sell-off bombs to generate clicks, nor be affected by market volatility."
Market Observers Note ETF Volatility Constraints on NPS Trading
Some market analysts noted that volatility from single-stock leveraged ETFs (Exchange Traded Funds) has made it practically difficult for NPS to realize short-term profits even during sharp market declines. The concern is that if NPS rapidly reduces its domestic stock holdings, it could heighten the increased market volatility already amplified by leveraged ETFs.
FAQ
How much did pension funds buy in KOSPI during July's market crash?
Pension funds net purchased 15 billion won in the KOSPI market from July 1 to July 28 (2:51 PM), according to Korea Exchange data released on July 28. During this period, the KOSPI index fell 2408.81 points (28.42%) to 6067.67.
What did NPS Chairman Kim Sung-joo say about election-related stock buying allegations?
Kim Sung-joo stated on July 16 that NPS "not at all" increased stock purchases for election purposes. He explained that value increases resulted from KOSPI index rises, not from specifically increased buying or selling activity. On July 22, Kim posted on social media that NPS maintains investment principles based on long-term perspective and does not get caught up in daily market fluctuations.
