NPS Suffers Valuation Loss of 19 Tril. Won on Investment in Major Korean Firms

The number of companies in which the National Pension Service (NPS) holds 5 percent or more in equity showed an increase this year, but the total value of the pension operator's shareholdings in these companies evaporated by more than 19 trillion won (US$17.06 billion), according to a recent survey.

Considering the fact that the NPS lost 15 percent of its investments in the equities of the companies, even allowing for the domestic stock market slump, it crumpled its pride as the nation’s largest institutional investor which operates public funds.

According to local corporate tracker CEO Score on Dec. 5, the number of companies in which the NPS holds over 5 percent in equity stood at 303 as of the end of September, while the total value of its stock holdings in the companies came to 102.06 trillion won (US$91.65 billion).

The number of companies in which the pension operator holds more than 5 percent in equity grew by 16 from 287 in the beginning of the year, but the total value of stocks plunged as much as 19.27 trillion won (US$17.31 billion), or 15.8 percent, from 122.33 trillion won (US$109.86 billion) in January. Of them, 108 companies saw an increase of NPS investment and 195 saw a reduction over the same period.

In particular, the depreciation was entirely due to fallen stock prices, as the NPS’ equity position remained the same or even climbed slightly in 99 out of the 108 firms that saw the reduction, according to CEO Score.

Meanwhile, Samsung Electronics Co., which ranks first in the business community, has continued to show a record high earnings from the beginning of the year but it saw the NPS’ stake slightly decrease 9.58 percent in January to 9.25 percent at the end of November. On the other hand, Hyundai Motor Co., which recorded a poor performance that was more like the “earnings shock,” saw the NPS’ stake rise from 8.44 percent to 8.7 percent over the same period.

An official from the business community said, “The NPS had 25.9 percent of domestic stock investment returns last year, but it has been recording a serious loss since the beginning of this year. The NPS needs an elaborate investment strategy as it is operating public funds.”