South Korea's National Pension Service (NPS), one of the world's largest pension funds, has recently adjusted its domestic stock portfolio with a clear, three-pronged strategy.
Disclosures from April 13, 2026, reveal a selective increase in holdings. In the KOSDAQ market, the fund favored semiconductor material suppliers like Daejoo Electronic Materials and Wonik Materials. In the main KOSPI market, it bought into undervalued large-caps such as Hyundai Steel and Hyosung TNC, while also increasing its stake in defensive sectors like finance (KB Financial) and shipping (Pan Ocean). This isn't a broad market bet but a targeted move based on specific catalysts.
The first pillar of this strategy is a 'policy rebalancing'. In late January, the NPS committee decided to raise its target allocation for domestic stocks to 14.9% for 2026, up from 14.4%, while slightly reducing its overseas stock target. This decision, influenced by a weaker Korean won and market volatility, signaled a larger flow of funds into the local market, naturally favoring large, stable companies.
Secondly, the strategy is fueled by 'supply chain momentum'. A landmark event in March was SK hynix's massive ₩11.9 trillion order for ASML's advanced EUV machines, a clear sign of its commitment to expanding HBM and next-gen DRAM production. This created a ripple effect, boosting expectations for domestic material and component suppliers. The NPS's investment in companies like Daejoo, which also gained attention for its specialized silver paste for satellite solar cells, aligns perfectly with this trend.
The third pillar is 'risk hedging'. Escalating tensions in the Middle East during March triggered volatility in oil prices, exchange rates, and interest rate expectations. To shield the portfolio, the NPS increased its exposure to defensive stocks. Financials and insurance companies (KB Financial, DB Insurance) benefit from rising rates and have strong shareholder return policies. Meanwhile, shipping firms like Pan Ocean act as a hedge against inflation and supply chain disruptions.
This carefully constructed portfolio has paid off, with stocks like Hyosung TNC and Daejoo Electronic Materials more than doubling in value since the beginning of the year. The NPS's approach demonstrates a sophisticated strategy that combines top-down policy shifts with bottom-up analysis of industry trends and macroeconomic risks.
- Glossary -
- Rebalancing: The process of realigning the weightings of a portfolio of assets. This involves periodically buying or selling assets in a portfolio to maintain a desired level of asset allocation.
- EUV (Extreme Ultraviolet) lithography: A highly advanced and precise chip manufacturing technology that uses light with an extremely short wavelength to etch circuits onto silicon wafers, enabling the production of smaller, more powerful semiconductors.
- CDMO (Contract Development and Manufacturing Organization): A company that provides comprehensive services from drug development through drug manufacturing on a contract basis for the pharmaceutical industry.