NPS logs negative Q1 investment return on stock market plunge

The National Pension Service (NPS) reported a negative 6.08% return on investment in the first three months of this year, weighed down by double-digit losses from equity portfolios.

Domestic and global stocks returned minus 18.52% and minus 16.90% respectively, after stock markets tumbled on fears over the coronavirus pandemic, the South Korean pension plan said on May 29.

They eclipsed a 6.85% return from global fixed income that was bolstered by a series of benchmark rate cuts and quantitative easing steps by central banks and foreign exchange gains.

Alternatives returned 4.24%, based only on interest and dividend incomes and foreign exchange gains.

With a rebound in stock markets, NPS has recovered most of the first-quarter loss in equity investments as of late May, NPS added in a statement on the quarterly results.

It aims to raise its allocation to global equities to around 35% by the end of 2025, from the current 20%.

Last year, the $600 billion pension plan recorded the strongest annual return of 11.31% in its history, reversing a negative 0.92% return in 2018.

Compared with other pension funds, NPS performed better with the preliminary quarterly result. In the January-March quarter, Norway’s Government Pension Fund Global and the Netherlands’ ABP posted returns of minus 14.6% and minus 9.8% return respectively, according to the NPS.

Separately, NPS is expected to earn between 150 billion and 200 billion won in proceeds from selling an office building in Seoul for about 520 billion won, according to financial industry sources last week.

Six domestic asset managers were shortlisted for the property sale. Last year, CJ Cheiljedang Corp., the holding company of the food-to-entertainment CJ Group, renewed its lease of the building through 2027.

Write to Jung-hwan Hwang and Hyun-il Lee at jung@hankyung.com