State pension fund reduces exposure to domestic equities in 2021

National Pension Service Investment Management Head Office in Jeonju, North Jeolla Province. (NPS)

South Korea’s public pension fund has reduced its exposure to large caps and other domestic equities in 2021 in an apparent effort to boost yields and diversify its portfolio, a company tracker said on Wednesday.

The National Pension Service (NPS) held stakes of 5% or more in 265 companies listed on the country’s primary and secondary stock exchanges at the end of 2021, down 10 from a year earlier, according to CEO Score.

From two years earlier, the number was down 49.

Last year, the state pension operator reduced its equity holdings in 216 companies, while increasing its stakes in 103 companies.

The public pension provider has announced plans to reduce the ratio of South Korean equities to its total investment to 15% by 2025.

Last year, the NPS increased its holdings in pharmaceutical and biotech companies, while reducing its holdings in IT, electrical and electronics companies.

At the end of 2021, the value of NPS’s stakes in the 265 large-cap companies stood at 154.6 trillion won ($130 billion), down 5.9% from a year earlier.

The NPS saw the value of its shares in global tech titan Samsung Electronics Co. fall 21.4%, or 11.2 trillion won, to 41.2 trillion won. This is the largest decline among large caps.

NPS’s stake in the largest-cap company declined to 8.69% from 10.7% during the cited period.

In contrast, the public pension operator bought the most shares of Samsung Biologics Co., South Korea’s biggest pharmaceutical company, with its purchase reaching 3.4 trillion won, according to CEO Score.

At the end of October 2021, the NPS had over 918 trillion won under its management, making it one of the largest pension operators in the world. (Yonhap)

Dolores W. Simon