National Pension Service resumes rebalancing, dismisses '74 trillion won sell-off bomb' rumors

National Pension Service Chairman Kim Sung-joo moved Tuesday to quash market rumors of a massive sell-off, calling circulating claims that the NPS would dump 74 trillion won ($47.8 billion) worth of domestic shares "utterly groundless" as the fund resumed its asset rebalancing.

Kim posted a message on his personal Facebook page titled "The truth about NPS rebalancing and the 74 trillion won sell-off bomb," directly rebutting market concerns over the rebalancing resumption. "Where does the figure of 74 trillion won come from? I don't know how it was calculated, but it is a preposterous number," he said.

The NPS sets target allocations for domestic and overseas assets — including shares and bonds — under its investment rules, capping exposure to any single country or asset class to limit the impact of market swings. After domestic stocks surged sharply in recent months, the fund raised its target weighting for domestic equities from 14.9 percent to 20.8 percent in late May, also widening the permissible range. The deadline to bring holdings back within the revised targets was June 30.

As the deferral on domestic equity rebalancing expired Tuesday, markets had been watching closely for signs of large-scale selling — but the feared wave of supply did not materialize.

"Even if the NPS proceeds with rebalancing, the probability of it becoming a 'bomb' is zero," Kim said, drawing a clear line. "Rebalancing is done gradually and precisely — it cannot involve large-scale selling over a short period."

He added that a rise in the Kospi alone does not trigger rebalancing. "The rebalancing strategy takes into account not just share price levels, but also the returns of other assets such as bonds and alternative investments, share price volatility, interest rates and exchange rates," he said.

Kim also cautioned the public against being misled by alarmist commentary. "The NPS is not an institution that immediately sells when prices rise to lock in gains, or immediately buys when prices fall," he said. "Please do not be swayed by the claims of some non-experts or media reports that stoke excessive fear by invoking a 'sell-off bomb' to drive clicks."

Korea Exchange data showed the feared deluge of selling did not emerge on the first day of rebalancing. Pension funds recorded net selling of only 217.8 billion won on the Kospi, while posting net purchases of 49.8 billion won on the Kosdaq.

On the Kospi on Tuesday, foreign investors and institutional investors recorded net selling of 1.7 trillion won and 163.1 billion won, respectively, while retail investors posted net purchases of 1.74 trillion won. Despite the expiry of the rebalancing deferral, the large-scale selling chaos that some had feared did not materialize.