Pension funds draw backlash for selling spree on KOSPI

The National Pension Service (NPS) Investment Management headquarters in Jeonju, North Jeolla Province. Courtesy of NPS

By Park Jae-hyuk

Public pension funds in Korea have enraged domestic retail investors because of their record-long selling spree on the benchmark KOSPI, which is claimed to be one of the main reasons for the recent bearish market.

Such a negative sentiment has sparked an unprecedented inspection by the financial watchdog on their recent stock trading records.

According to the Financial Supervisory Service (FSS), Friday, its securities market team asked major asset management companies entrusted with assets from the National Pension Service (NPS), the Government Employees Pension Service, the Teachers' Pension and the Postal Savings & Insurance to submit data on their transactions of local stocks since last November.

The FSS said it made the request this week to better monitor market trends.

Data compiled by the Korea Exchange showed the four and other pension funds here have continued net selling of stocks on the KOSPI over the past 37 trading sessions since Dec. 24. They collectively unloaded stocks worth over 12 trillion won ($10 billion).

Individual investors have complained about this trend, since the KOSPI had remained sluggish between 3,000 and 3,100 points over the past few weeks, after peaking at 3,200 point earlier last month.

"The Board of Audit and Inspection should start an audit during the first half to crack down on the reckless management of assets by pension funds and asset management firms," said Chung Eui-jung, head of the Korea Stockholders Alliance comprised of over 40,000 retail investors here.

Pension funds and asset managers, however, expressed concern over possible damage to their independence, although the FSS emphasized the data submission was not compulsory.

According to industry sources, the NPS refused to submit its data.

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