South Korean public pensions have been ordered to hand in their stock transaction records to the financial authority after keeping up selling spree since November, baffling asset managers who prize confidentiality in investment strategy.
The Financial Supervisory Service (FSS) recently asked asset management firms trusted with stock trade on behalf of top 4 social funds - National Pension Service (NPS), Government Employees Pension Service, Teachers’ Pension, and Postal Savings and Insurance to submit stock trade records from November, according to multiple industry sources on Thursday.
One source from the asset management company confirmed the action was made at the request of the authority, although questioning the motive behind the “rare” move.
Another source said the company had to leave out some pension funds as they refused to agree to the data submission.
An unnamed FSS official told the Maeil Business Newspaper that the regulator requested the records for a “routine” check and denied it was acting as a kind of pressure amid retail complaints about heavy institutional selling.
“The FSS has no say or authority over pension funds’ stock investment,” he added.
Still, the over-stretched watch by the financial regulator has been met with scorns from the institutional industry at a time financial policies have been swayed by political pressure ahead of the crucial April by-elections to vote for Seoul and Busan mayors. The normalization of the stock short sale was pushed back to May after the elections from originally planned March in the face of opposition from the ruling party to indulge retail investors.
Pension funds have maintained net selling position in the Kospi market for 36 trading sessions in a row since Dec 24, offloading over 12 trillion won ($10.8 billion) in total. The Kospi has been boxed at 3,100 range after the record-setting rally from retail fad.
Pension funds must follow the preset target and adjust their investment portfolio accordingly.
As of November, NPS, the country’s largest institutional investor, has invested 144 trillion won in the domestic stock market, with 47 percent of the stock investment managed by external fund managers. Its target for the share of domestic stocks within its investment portfolio for this year is set at 16.8 percent. The ratio had gone up as high as 19.6 percent in November last year on sharp gains.
By Moon Ji-woong, Moon Ga-young and Cho Jeehyun
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]