National Pension Service weighs raising South Korean stock target

May 23 (Asia Today) -- South Korea's National Pension Service is drawing market attention over whether it will raise its target allocation for domestic stocks as it prepares to finalize its medium-term asset allocation plan for the next five years.

The fund management committee is scheduled to hold its fifth meeting in Seoul on Thursday to deliberate and approve the 2027-31 medium-term asset allocation plan, according to the financial investment industry.

The focus is on whether the fund will increase its target share of Korean equities. The pension fund set its year-end target for domestic stocks at 14.4% in its 2026 fund management plan last year, but its actual allocation rose sharply as the KOSPI continued to climb.

At a January meeting, the fund committee raised the domestic stock target by 0.5 percentage point to 14.9% and increased the domestic bond target by 1.2 percentage points to 24.9%. It lowered the target for overseas stocks by 1.7 percentage points to 37.2%.

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The domestic stock share has already far exceeded the permitted range. Even after accounting for tactical and strategic asset allocation limits, the maximum allowable share for domestic stocks is about 19.9%. But the actual share stood at 24.5% at the end of February. Market participants say it may now exceed 25%, given the recent rise in the KOSPI.

The issue was reportedly discussed at the fund committee's fourth meeting earlier this month, with a medium-term plan reflecting a higher domestic stock allocation than this year's target.

Views differ on the scale of any increase. Some officials and market watchers say the fund should prioritize stability as a long-term pension investor, especially with the KOSPI nearing the 8,000 mark. Others say the fund has room to raise its domestic stock allocation in pursuit of higher returns, given the possibility of further gains in the Korean market and the pension fund's record-high return last year.

-- Reported by Asia Today; translated by UPI

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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260523010006808