[Alpha Biz= Paul Lee] New data shows that South Korea’s National Pension Service (NPS) has increased its overseas stock investments more aggressively than individual investors this year—challenging the common perception that retail “Korean dip-buyers abroad” (the so-called Seohak Ants) are the main drivers behind the won’s depreciation.


According to the Bank of Korea, the public sector—classified as the NPS in balance-of-payments data—purchased USD 24.5 billion in foreign equities in the first three quarters of 2024, up 91.7% from a year earlier. Individual and corporate investors increased their overseas equity purchases by 73.9%, to USD 16.6 billion.


The NPS accounted for 34.1% of all outbound equity investments by Korean residents, surpassing the 23.1% share held by individual investors—indicating the pension fund’s greater influence on FX market flows.


Concerned about the impact of large overseas investments on exchange-rate volatility, the Ministry of Finance launched a four-party consultative framework last month with the Bank of Korea, the Ministry of Health and Welfare, and the NPS to explore a new policy approach.


Experts note that given the NPS regularly buys tens of trillions of won worth of foreign assets each year, strategies may be needed to reduce its direct impact on the won-dollar exchange rate. However, both the Ministry of Health and Welfare and the NPS remain cautious about policy intervention, stressing that investment decisions must prioritize fund returns and the long-term sustainability of the pension system.


The NPS’s investment plan is drafted by the Health and Welfare Minister, approved by the Fund Management Committee and the Cabinet, and finalized by the President. The Ministry of Finance has coordination authority within this process and can influence the scale of overseas investment.

 

 

[ⓒ 알파경제. 무단전재-재배포 금지]