South Korea’s National Pension Service (NPS) trimmed its holdings in construction, chemical, auto parts and media while upping its stakes in financial, material and equipment sectors in the latter half.

Korea’s largest institutional investor released a report on the 113 stocks in which its ownership saw changes in the fourth quarter, according to the Financial Supervisory Service on Wednesday.

The pension fund loaded up on most of the stocks by 1 percentage point or more. But for 44 stocks, its stake actually fell.

The offloaded stocks were mostly small companies outside the Kospi 200 belonging to construction, chemical, media, and auto part and machinery sectors.

The stock that showed the steepest fall was HDC i-Controls, a provider of eco-friendly building solutions and home automation systems. NPS cut its holdings in the company by 3.71 percentage points. It also reduced its stake in HDC Hyundai Development, an affiliate of HDC i-Controls. The decision was based on the bleak outlook for the country’s housing market, which has been hit with a barrage of regulations in the government’s ongoing efforts to rein in runaway home prices.

In the chemical sector, NPS reduced its stake in Namhae Chemical, Hyosung Advanced Materials and Songwon by more than 1 percentage point each. The chemical industry has been hitting fresh lows, hurt by the global economic slowdown and ongoing trade war between the United States and China. While demand is expected to gradually recover this year, analysts don’t see much of a silver lining as massive ramp-ups are planned in the U.S. and China.

NPS also pared its holdings in auto parts and machinery. Shares in Sangsin Brake fell by 2.08 percentage points, ST&C 1.2 percentage points, Hyundai Electric 1.21 percentage points and Intops 1.16 percentage points. Companies whose portfolios were centered on internal combustion engines were also cut, with NPS’ stake in Hyundai Wia lowered to 11.28 percent from 12.31 percent.

Experts say shares of auto parts are unlikely to pick up any time soon given the global recession in the auto industry. According to Hana Financial Investment, auto market growth in the United States, China and Europe, which together account for 60 percent of the world’s total auto demand, is less than 1 percent, with global market growth this year to stop short at 0.5 percent compared to last year.

NPS also shaved its holdings in media, a market that has become increasingly crowded and hypercompetitive. Its stake in the video streaming platform Afreeca TV fell by 3.63 percentage points and SBS Media Holdings by 2.22 percentage points.

Meanwhile, NPS upped its stake in most local heavyweights and financial players. Even when Kospi had lost its 2,000 mark last August, the fund scooped up more of local stocks. Financial stocks in which its stake rose by more than 1 percentage point include Industrial Bank of Korea, DGB Financial Group, DB Insurance and Korea Investment Holdings. It even raised its share in the hypermarket chain E-mart by 2.07 percentage points, even though the stock plunged more than 40 percent over the past year.

While it was quick to shed most stocks in the junior Kosdaq, it scaled up its holdings in parts, materials and equipment, betting on the government’s recent efforts to localize the core component sectors.

The second and third fastest-growing stocks in the NPS portfolio in the fourth quarter – YMT and UniTest – both turned out to be in materials and equipment. Semiconductor part and equipment stocks that saw gains of 5 percentage points or more include EO Technics, TES, HANA Materials and PSK.

By Kim Je-lim and Kim Hyo-jin

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