South Korea's National Pension Service ends stock rebalancing pause, market impact expected

South Korea’s National Pension Service (NPS) will resume its domestic‑stock rebalancing in July after a temporary suspension that lasted until the end of June. The fund had raised its target equity allocation from 14.4% to 14.9% earlier this year and, under a mid‑term plan, aims to lift the target to 20.8% while expanding its strategic‑asset‑allocation range. Analysts note that the pause helped lift the KOSPI and the won, and that the coming rebalancing could become a key market driver.

Researcher 변준호 of IBK Investment Securities warned, “From July the NPS is likely to cut its overly high domestic‑stock share,” while 조용구 of Shin‑Young Securities cautioned that “interpreting the move as an immediate ‘sell‑bomb’ would be a misreading; actual execution will be discreet to minimise market disruption.” Estimates suggest that if the KOSPI reaches 9,000 points, the NPS could need to sell up to 74 trillion won of equities, rising to 120 trillion won at the 10,000‑point level – though such volumes would be spread over time.

In an interview, market‑policy commentator Hong Chun‑uk said the NPS is expected to sell gradually to avoid a shock, and that the withdrawal of the pause “is not likely to generate a large market impact.” The broader discussion also highlighted concerns about overall market overheating, with inflows into leveraged ETFs and high‑valuation IPOs cited as warning signs.