Pension funds return to net buyers in Kospi, mostly gobbling up auto stocks

2021.06.09 15:13:15

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South Korean institutional major pension funds have turned to net buyers on the main Kospi bourse in June with eager appetite mostly for automobile and auto parts shares.

According to the Korea Exchange on Tuesday, pension funds net purchased 950 billion won ($85.2 million) Kospi shares on June 1-8. It was the first time for them to turn into net stock buyers in the Korean market this year.

Although selling spree lasted until last month, the scope of dumping has been softening – from a net 8.06 trillion won in January to 4.32 trillion won in February, 3.34 trillion won in March, 2.92 trillion won in April and 3.7 billion won in May.

Their position was influenced by their leader National Pension Service (NPS) that lately adjusted up strategic asset allocation (SAA) limit for local stocks to 3.0 percentage points from earlier 2.0 percentage points in April.

Auto and auto parts stocks were favorites as pension funds snatched up 107.1 billion won worth Kia shares, 101.6 billion won worth Hyundai Motor, 39.3 billion won worth Hyundai Mobis, and 31.3 billion won worth Mando.

“Automobile stocks had been lackluster in April-May due to the global semiconductor shortage and have room for bargain hunting due to strong vehicle sales,” said Kim Jung-won, head of investment strategy at Hyundai Motor Securities.

“Inventory level will remain low for long, and finished carmakers will see earnings growth from sales operations. Financing units will also be able to enjoy improved earnings with an increase in used car prices,” said Lee Jae-il, an analyst at Eugene Investment & Securities.

By Pulse

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