The National Pension Service has allocated more than half of its domestic equity investments into major blue chips of the country’s four largest family-run conglomerates, according to NPS data.
Its investments in shares of units of Samsung, Hyundai Motor, SK and LG, worth some 40.7 trillion won ($37 billion), accounted for more than 54 percent of the pension fund’s equity portfolio as of the end of July.
The NPS’ investment in debt securities of those four chaebol worth 9.6 trillion won accounted for 4 percent of its domestic bond portfolio.
Its total investment value of bonds and stocks of conglomerates, however, fell about 3 percent as of July this year compared with the end of last year.
This is due to stock price losses of Samsung units, especially its flagship Samsung Electronics, in which the NPS has the highest investment exposure among the top chaebol equities.
The pension fund’s equity value in Samsung units dropped more than 8 percent to 20.3 trillion won in the same period as shares of Samsung Electronics fell from 1.52 million won late last year to 1.28 million won at the end of July.
Its total holdings including bonds of Samsung amounted to 23.3 trillion won.
Its investment in stocks and bonds of units of Hyundai Motor, the NPS’ second largest source of stock, amounted to 11.9 trillion won as of the end of July.
Overall, it achieved returns of almost 7 percent on its assets both at home and abroad in 2012, compared with 6.42 percent for the teachers’ fund and 3.5 percent for public employees’ pension fund, according to the NPS.
The country’s pension fund operator’s assets reached more than 400 trillion won early this year.
This accounts for about one-third of Korea’s gross domestic product and is worth almost double the market cap of Samsung Electronics, the largest listed company on the stock exchange, it noted.
It is also more than eight times the sum of Hyundai Motor’s total market value, and the pension fund operator could afford to acquire about an 88 percent stake in Apple, the creator of the iPhone and iPod.
The Korean pension service has been increasing its investment in riskier assets such as stocks, while lessening its fixed-income or safe-haven portfolio to gain higher returns as the number of pension beneficiaries is set to grow further amid a rapidly aging population.
By Park Hyong-ki (
hkp@heraldcorp.com)
