Korea Pension Fund’s Pivot Amplified Stock Swings, Barclays Says

The National Pension Service (NPS) of South Korea's decision to pause its portfolio rebalancing activities has amplified stock market swings and exerted downward pressure on the Korean won, Barclays Plc reported on May 20, 2024. This temporary halt, which began on May 1, 2024, has removed a significant buyer from the market, contributing to increased volatility. Barclays analysts noted that the NPS typically rebalances its portfolio quarterly, a process that involves buying and selling assets to maintain target allocations. The suspension of this regular activity has disrupted the usual market dynamics, leading to sharper price movements in equities. Furthermore, the absence of the NPS as a consistent buyer has weakened demand for Korean assets, impacting the exchange rate of the won against other major currencies. The report from Barclays suggests that this move by one of the world's largest pension funds has had a noticeable effect on market stability and currency valuation in South Korea.