NPS loses $1.2 bn in local stocks in Q1 on weak battery shares

South Korea’s National Pension Service (NPS), the world's third-largest pension fund, lost 1.66 trillion won ($1.2 billion) in domestic stock value in the first quarter of this year as shares in the battery sector tumbled amid the electric vehicle industry slowdown.

As of March 29, the state pension fund holds a 5% stake or more each in 276 listed companies in Korea and the stock holdings in the firms are valued at 138.62 trillion won, according to financial data research firm FnGuide Inc. last week.

Compared with the pension scheme’s last disclosure as of Dec. 29, 2023, the number of firms has fallen by 2.1% and the stock holding value has dropped 1.2%, or 1.66 trillion won.

Of 293 listed Korean companies in its portfolio, the holding value in 191 firms declined due to falling share prices or divestment by the pension fund. The holding value in the other 102 companies increased as their stock rose or through purchases by the NPS.

DROPS IN BATTERY SHARES

NPS managed 1047.3 trillion won in assets as of Jan. 31 and is one of the most influential investors in the Korean stock market.

NPS lost its value primarily in battery and battery materials stocks. The holding value dropped 852.5 billion won in LG Energy Solution Ltd., 729 billion won in POSCO Holdings Inc., 641.6 billion won in LG Chem Ltd., 474.4 billion won in POSCO Future M Co. and 466.3 billion won in Samsung SDI Co.

Given that NPS has maintained its holdings in the five companies since the end of last year, the firms’ share price decline has driven a plunge in value.

LG Energy Solutions’ stock price fell 14.7% between Jan. 2 and March 29. POSCO Holdings share plunged 25.7%; LG Chem’s stock dropped 24.7%; POSCO Future M’s nosedived 30.6%; and Samsung SDI declined 18.2%.

NPS saw the largest decline in its shareholding value in Naver Corp., an online portal giant. The decline partially came from the pension scheme cutting its holdings by 1.11 percentage points during the same period.

RISE IN HOLDING VALUE

NPS’ local stock holding value increased the most in SK Hynix Inc. The pension scheme saw a 2.14 trillion won surge in its shareholding value in the chipmaker while maintaining 7.9% ownership. SK Hynix’s share price has increased 26.3% since Jan. 2.

Among the other top portfolio companies are contract drugmaker Samsung Biologics Co., in which NPS’ shareholding value soared 657.8 billion won, and the country’s container line HMM Co., with a 506.5 billion won increase.  

The pension fund also saw a 498.9 billion won increase in Hyundai Motor Co. and a 471.3 billion won rise in Hanmi Semiconductor Co. stocks. Its holding values in Hanwha Aerospace Co., HD Hyundai Electric Co. and Kia Corp. increased by 444.4 billion won, 388.6 billion won and 377.8 billion won, respectively.

Among the shares, NPS increase its holdings in Samsung Biologics, Hyundai Motor and Hanwha Aerospace by 1.08 percentage points, 0.08 percentage point and 0.48 percentage point, respectively. The pension fund cut its ownership in HD Hyundai Electric by 2.55 percentage points, but its share price surge led to the increased holding value.

HOLDINGS ADJUSTMENT

NPS increased its ownership in some companies to 5% or above during the period. Among the firms the main Kospi-listed companies are HMM, POSCO International Corp., L&F Co. Daou Technology Inc., Kyung Dong Navien Co., KCTech Co. and Jahwa Electronics Co.

On the secondary bourse Kosdaq, Daejoo Electronic Materials Co., ABL Bio Inc., Emro Inc. and Chips&Media Inc. were newly added to the pension fund’s domestic stock portfolio for ownership of 5% or more.

Meanwhile, NPS slashed its holdings in LG Display Co., Ssangyong C&E Co., SK Gas Ltd., YG Entertainment Inc., EO Technics Co., AfreecaTV Co. and Simmtech Co. to less than 5%.

Write to Tae-Ung Bae at btu104@hankyung.com

Jihyun Kim edited this article.