Despite a series of government measures and urging to stimulate the secondary Kosdaq market, pension funds including Korea biggest investor National Pension Service (NPS) have dumped shares in Kosdaq to shift to safer blue-chips on the bigger Kospi, resulting in bigger retreat in the junior market amid overall bearishness in Korean equities.

According to the nation’s sole stock exchange operator Korea Exchange on Tuesday, pension funds have increased their investment in Kospi-listed blue-chip stocks including Samsung Electronics, Daewoo E&C and LG Uplus shares while selling off Nasmedia, Caregen and Com2us on the secondary Kosdaq this month. They have also upped holdings in companies boasting high dividend payout such as Samsung SDI, Samsung Electro-Mechanics, LG Household & Healthcare, AmorePacific, KT and KEPCO this year.

The pension funds bought a combined 134.9 billion won ($119 million) worth shares in Samsung Electronics on Nov.7 when they dumped 132.7 billion won worth Kosdaq-listed shares. They have also been upping stakes in another chip-making giant, SK Hynix.

Kim Dong-won, an analyst from KB Securities, said that the pension funds seem to be betting on a quick recovery in chipmakers on conclusion that the latest concerns on the outlook for the chipmaking industry were excessive.

While upping their position in Kospi blue chips, they have kept up their selling spree on major Kosdaq firms including Celltrion Healthcare, Sillajen, Viromed and Hugel. Some speculate the NPS is aimed at enhancing investment stability by reducing holdings in volatile Kosdaq companies and increasing reliance on the Kospi market under the new chief investment officer An Hyo-joon, president at BNK Financial Group who came to office last month amid strong criticism against the investor’s money-losing performance.

The main Kospi plummeted about 14 percent in October alone as foreign investors dumped a net 4.5 trillion won shares. The tech-heavy Kosdaq also slid nearly 20 percent, wiping out about 261.4 trillion won in market cap.

By Park Ui-myung and Choi Mira

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