NPS picks tech, electronics as its favorite local stocks in 2023

South Korea’s National Pension Service (NPS), the world’s third-largest pension fund, picked information tech, electric and electronic shares as its favorite domestic stocks last year, according to Seoul-based business data research firm CEO Lab’s report on Wednesday.

Samsung Electronics Co. topped NPS’ domestic stock portfolio in terms of valuation last year, followed by crosstown chipmaking rival SK Hynix Inc. The pension fund’s holdings in Samsung Electronics and SK Hynix were valued at 34.46 trillion won ($25.6 billion) and 8.14 trillion won, respectively, as of the end of 2023.

The state-run fund owns a 5% or greater stake each in 281 listed firms in Korea as of Dec. 31, 2023. Among them, 41 firms were in the tech and electronics sector, the largest portion of NPS’ domestic stock portfolio.  

NPS also invested in 40 holding firms, 26 petrochemical companies, 24 firms in the service sector and 23 in the shipbuilding, machinery and equipment industry.

FAVORITES BY HOLDING RATIO

LS Corp., the holding firm of energy conglomerate LS Group, topped NPS’ stock portfolio in terms of shareholding percentage – 13.85% as of the end of last year.

Weapons system developer LIG Nex1 Co. came in second with 13.53%, followed by 13.35% in cosmetics giant L'Oréal supplier Cosmax Inc., 13.25% in Seoul Broadcasting System and 13.2% in skincare product maker Kolmar Korea Co.

NPS expanded its ownership the most in Hyosung Heavy Industries Corp, increasing its holdings in the Hyosung Group unit from 6.04% at end-2022 to 11.29% at end-2023.

NPS boosted the stake in expectations of Hyosung’s earnings growth from high-voltage transformers and power equipment sales, the report said.

The pension giant also raised its holdings in SoluM Co., an electric vehicle parts supplier to Volkswagen AG, from 5% at end-2022 to 10.19% at end-2023 on forecasts of the global EV charging sector’s growth, the report added.  

TOP STOCKS BY VALUATION

Samsung Electronics topped NPS’ domestic stock portfolio in terms of valuation. The pension fund holds 7.35% of the chipmaker’s stake, valued at 34.46 trillion won as of the end of 2023. It is around 25% of the total value of stocks that NPS has 5% or greater ownership in.

SK Hynix followed with 8.14 trillion won of valuation for a 7.9% stake.

EV battery maker LG Energy Solution Ltd. ranked third with a 5.74% stake for a 5.74 trillion won valuation at end-2023. Samsung Biologics Co. came in fourth with a 6.72% holding for 3.64 trillion won, followed by Naver Corp. with 9.34% for 3.4 trillion won.

Hyundai Motor Co. came in fifth with a 7.35% ownership for 3.16 trillion won, while its affiliate Kia Corp. followed with 7.17% for 2.84 trillion won valuation as of end-2023.

SHORTED SHARES

NPS slashed its holdings in SK Rent-a-Car Co. from 8.66% at the end-2022 to 0.6% at the end of last year. 

The pension fund has sold the shares as the company’s parent SK Networks Co. is likely to delist the car rental subsidiary after fully acquiring it this year, the report said.

The pension fund’s stake in Doosan Corp., the holding firm of Doosan Group, sharply dropped from 13.6% at end-2022 to 6.19% at end-2023.

The divestment came as the holding company’s valuation dropped after Doosan Robotics Inc. went public last October, the report added.

Write to Tae-Ung Bae at btu104@hankyung.com
Jihyun Kim edited this article.