South Korea's National Pension Service (NPS) has emerged as a major institutional beneficiary of the AI-driven semiconductor bull market sweeping the Korean stock exchange. It reported a staggering quarterly paper profit of nearly 190 trillion won, setting a new historical record, with two semiconductor behemoths accounting for almost all of those gains.
According to a report, as the KOSPI index broke through the 9,000-point barrier for the first time in history during the second quarter and maintained its high levels, the valuation of the NPS's holdings in domestic listed stocks surged by 189.5684 trillion won (approximately 850 billion yuan) within three months, achieving a quarterly return of 63.9%. This increase was over 100 trillion won higher than the first quarter, setting a new quarterly record.
Within this total, the combined valuation increase from holdings in Samsung Electronics Co Ltd and SK hynix amounted to 151 trillion won (approximately 677 billion yuan), constituting 79.8% of the overall gain. Notably, SK hynix's contribution this quarter surpassed that of Samsung Electronics for the first time, becoming the single largest source of profit for the NPS.
With the temporary suspension of the NPS's domestic stock rebalancing measures expiring at the end of June, the market is now intensely focused on the potential scale of selling the fund might initiate from July onwards. This uncertainty could exert short-term pressure on the South Korean stock market.
Semiconductor Leaders Drive the Surge
Data from financial information provider FnGuide shows that as of July 6th, the total valuation of stocks in 270 listed companies where the NPS holds over a 5% stake and has publicly disclosed this reached 486.0118 trillion won (approximately 2.18 trillion yuan). This marks a significant jump from 296.4433 trillion won at the end of March.
SK hynix was the standout performer this quarter. While the NPS's stake in the company remained unchanged at 7.50%, the valuation of its holding skyrocketed from 43.156 trillion won at the end of March to 125.2968 trillion won. This represents a quarterly increase of 82.1407 trillion won (approximately 368.3 billion yuan), a staggering rise of 190.3%.
For Samsung Electronics, the NPS's stake increased slightly from 7.75% to 7.84%. The valuation of its holding grew from 76.6842 trillion won to 145.8467 trillion won, an increase of 69.1626 trillion won (approximately 310.1 billion yuan), or 90.1%.
The combined proportion of these two companies within the NPS's domestic equity portfolio has surged significantly from 40.4% at the end of March to 55.7%, indicating a marked increase in concentration.
Wider Semiconductor Ecosystem Benefits
The overall rise in the semiconductor industry chain led to broader gains across the portfolio. The valuation of the holding in SK Square increased by 11.9953 trillion won (approximately 53.8 billion yuan), ranking third in terms of incremental value. Despite a reduction in the NPS's stake in Samsung Electro-Mechanics from 10.46% to 9.95%, its valuation still rose by 10.4072 trillion won (approximately 46.7 billion yuan), placing it fourth.
Additionally, Samsung C&T Corporation, Samsung Life Insurance, and SK Inc. saw substantial increases of 2.7278 trillion won, 2.5137 trillion won, and 2.0577 trillion won, respectively.
In the second quarter, 19 stocks, including Simtech and SK Eternix, were newly added to the list of companies where the NPS holds over a 5% stake requiring disclosure. Conversely, 21 stocks, including LX Semicon and Korea Tourism Organization, fell below the 5% threshold. The largest increases in stake percentage were seen in BH Co Ltd (rising from 7.47% to 13.35%) and DL E&C (rising from 8.06% to 11.44%).
Not All Holdings Rose
Not all positions recorded gains. Mirae Asset Securities, which performed strongly in the first quarter, saw its valuation decrease by 1.0717 trillion won (approximately 4.8 billion yuan) in Q2, becoming the single holding with the largest loss.
LG Energy Solution saw its valuation shrink by 573.7 billion won, Hanwha Systems decreased by 451 billion won, and Kakao Corp and Naver Corp fell by 447 billion won and 415.3 billion won, respectively. The internet and new energy sectors generally underperformed compared to semiconductors.
During the same period, the NPS reduced its stakes in several companies including LG Corp, SK Chemicals, Daejoo Electronic Materials, and Vinatech Co Ltd. The number of companies where it holds a stake exceeding 10% also slightly decreased from 34 at the end of the previous quarter to 32.
Despite the impressive second-quarter results, the NPS's next moves have raised market concerns. Authorities had previously implemented a temporary suspension of the fund's domestic equity rebalancing operations to support the local stock market, a measure that officially expired at the end of June.
Given the significantly increased portfolio weight of the two semiconductor giants, if the NPS initiates rebalancing to restore its predetermined asset allocation ratios, it may need to reduce some of its domestic equity holdings. Market participants are closely monitoring the potential scale of selling that could begin in July to assess its actual impact on the South Korean stock market.
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