The Zhitong Finance App learned that South Korea's major pension funds suffered losses of 182 trillion won (137 billion US dollars) after stocks such as Samsung Electronics and SK Hynix declined in value. According to financial data provider FNGuide, the valuation of positions held by the Korea National Pension Service (NPS) with a shareholding ratio of 5% or more in 287 listed companies has dropped from 515.93 trillion won at the end of June to 333.53 trillion won on October 15. Based on NPS's past results, this is the first quarterly decline since the fourth quarter of 2024, and also marks a sharp reversal in the situation of the fund, which achieved record returns in the first half of the year.
This reversal highlights the vulnerability of one of the world's largest pension funds to local market fluctuations — NPS holds huge shares in chipmakers Samsung Electronics and SK Hynix, making it particularly exposed to the boom and bust cycle of technology stocks.
This decline was in stark contrast to NPS's performance in the first half of the year. The fund's return in the first half of the year was 27.2%, the best performance for the same period since at least 2022. As of the end of June, NPS managed assets of 1,866 trillion won ($1.35 trillion).
The fund raised its target allocation ratio for Korean stocks at the end of the year in May and lowered its target exposure to overseas stocks, thereby increasing its planned exposure to one of the world's top performing markets in the first half of the year.
SK Hynix was the biggest drop. The market value of NPS's holdings at this chipmaker shrunk by about 74.2 trillion won; the market value of its Samsung Electronics holdings evaporated by about 56.9 trillion won. Together, the two stocks accounted for about 72% of the total decline.
In recent months, the Korean stock market has experienced severe turbulence amid the launch of a single-stock leveraged ETF and the market's growing questions about the sustainability of the market driven by artificial intelligence. The Korea Composite Stock Price Index (Kospi) hit a record closing high of 9,114.55 on June 22, then fell about 39% as of October 15. NPS's shareholding ratio in SK Hynix fell from 7.5% to 7.32%, while Samsung Electronics's shareholding ratio remained unchanged at 7.84%.
The market decline also engulfed the NPS in a political debate: whether the pension giant should do more to cushion the sharp swings in the South Korean stock market. South Korea's opposition People Power Party (People Power Party) criticized NPS for failing to act as a market stabilizer in this round of sell-offs, saying that the fund's decision to suspend rebalancing earlier this year made it less room to buy stocks when the market falls.