Korea's pension service to boost domestic stock investments as local currency's weakness continues
Published: 26 Jan. 2026, 21:30
![Minister of Health and Welfare Jeong Eun-kyeong, far left, speaks during a National Pension Fund Management Committee meeting at the government complex in Seoul on Jan. 26. [YONHAP]](https://koreajoongangdaily.joins.com/data/photo/2026/01/26/ded53c78-ccc4-43cc-b467-a7d29b3c38c2.jpg)
Minister of Health and Welfare Jeong Eun-kyeong, far left, speaks during a National Pension Fund Management Committee meeting at the government complex in Seoul on Jan. 26. [YONHAP]
The National Pension Service (NPS), one of Korea’s largest institutional investors, will increase its investments in domestic stocks and bonds this year while cutting back on foreign equity investments.
The move appears aimed at reducing pressure on the foreign exchange market amid continued weakness of the Korean won and at avoiding forced selling triggered by a sharp rise in the local stock market.
The Ministry of Health and Welfare held the year’s first National Pension Fund Management Committee meeting at the government complex in Seoul on Monday and approved a revised asset allocation plan.
It was the first time since 2021 that the committee’s first meeting of the year took place in January. Such meetings typically take place in February or March. The early timing, before even the previous year’s accounts are finalized, highlights the urgency of the portfolio revision.
“The faster-than-expected rise in the Korean stock market likely made it urgent to adjust the investment portfolio,” said Kim Yong-ha, a professor of IT Finance and Management at Soonchunhyang University.
The key change in this year’s asset allocation plan is to reduce the share of overseas investments while increasing domestic allocations.
![Government officials are seen during a National Pension Fund Management Committee meeting at the government complex in Seoul on Jan. 26. [YONHAP]](https://koreajoongangdaily.joins.com/data/photo/2026/01/26/d5e465d3-a0ff-4a5f-985f-81aa28d0b7d6.jpg)
Government officials are seen during a National Pension Fund Management Committee meeting at the government complex in Seoul on Jan. 26. [YONHAP]
The committee had initially set the target share for domestic equities at 14.4 percent by the end of this year. That figure has now been revised upward by 0.5 percentage points to 14.9 percent — the same as the year-end target from last year.
Given the allowable asset allocation range of plus or minus 5 percentage points, plus or minus 3 percent for strategic allocation, and plus or minus 2 percent for tactical allocation, the fund could hold up to 19.4 percent in domestic equities.
However, as of the end of October 2025, domestic equities already accounted for 17.9 percent of the fund. With the Kospi recently approaching the 5,000 mark, the fund was pushed close to its upper limit, potentially triggering forced selling to stay within its cap.
By raising the target by 0.5 percentage points, the NPS now has room to invest approximately an additional 7 trillion won ($4.8 billion) in domestic equities, based on the estimated fund size of 1,454 trillion won as of the end of last year.
The target for domestic bonds was also raised by 1.2 percentage points to 24.9 percent. Meanwhile, the share of overseas equities was cut from the original 38.9 percent target to 37.2 percent, a 1.7 percentage point reduction.
![A person is seen visiting the National Pension Service's northern Seoul office on Jan. 9. [YONHAP]](https://koreajoongangdaily.joins.com/data/photo/2026/01/26/be76fa49-0107-4edb-be2e-8ce13d917d66.jpg)
A person is seen visiting the National Pension Service's northern Seoul office on Jan. 9. [YONHAP]
These changes reflect a mix of factors, including currency market volatility and the rise in the local stock market.
The committee stated that the adjustment was made in consideration of “the burden of foreign currency procurement due to the growing size of the fund and the recent foreign exchange market conditions favoring demand over supply.”
Despite government efforts, the won has continued to hover in the upper 1,400-won range against the dollar, with volatility remaining high.
While the NPS has not increased dollar supply through stronger currency hedging, it is sending a signal to the market by reducing demand for dollars through slower overseas investment.
“Currency hedging was not discussed during this meeting, but moderating the pace of foreign investment will likely have a much stronger stabilizing effect on the currency market than hedging alone,” said a government official.
![The National Pension Service's central Seoul office in Jongno District, central Seoul is seen on Jan. 5, 2024. [NEWS1]](https://koreajoongangdaily.joins.com/data/photo/2026/01/26/0a1bef08-daf6-4bd2-99e1-1b612d267374.jpg)
The National Pension Service's central Seoul office in Jongno District, central Seoul is seen on Jan. 5, 2024. [NEWS1]
Additionally, the committee has temporarily suspended the requirement to rebalance the portfolio when asset class shares exceed the strategic allocation range of plus or minus 3 percentage points. The decision reflects concern that frequent rebalancing could have excessive influence on the market amid heightened volatility in local equities.
Market participants are likely to interpret the increased domestic investment as a signal to support the stock market.
“The modest increase in domestic equity allocation and the temporary pause in rebalancing are minimal, cautious adjustments aimed at avoiding forced selling,” said Prof. Kim.
Some critics say the government is using pension assets — which must balance returns and stability — as a policy tool.
“This adjustment signals excessive government intervention in the people’s assets,” said Yun Suk-myung, honorary research fellow at the Korea Institute for Health and Social Affairs. “Increasing the domestic equity share poses a serious risk of undermining the integrity of the National Pension Fund.”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY JUNG JONG-HOON,CHAE HYE-SEON [[email protected]]
with the Korea JoongAng Daily
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