NPS Chief Kim Says Rebalancing Poses Zero Risk of a Selloff

Calls projections of a 74 trillion won ($53.3 billion) stock sale "absurd"

Kim Sung-joo, chairman of the National Pension Service, said on July 1 that even if the pension fund begins rebalancing, there is zero chance it will trigger a market "sell bomb."

In a Facebook post, Kim said the fund management committee changed the rebalancing rules in May so any adjustment would be carried out gradually over a long period.

He also rejected speculation that the NPS could sell 74 trillion won ($53.3 billion) of domestic stocks.

"The figure itself is wrong," Kim wrote. "I don't know how they calculated it, but it is an absurd number."

Brokerages had earlier projected that if the Kospi rises above 9,000, the NPS could sell as much as 74.4 trillion won ($53.6 billion) in domestic equities as part of rebalancing. If the index tops 9,500, the amount could reach 97.7 trillion won ($70.4 billion).

Kim said rebalancing cannot result in a large short-term sale. He likened the process to adjusting a scale or seesaw when one side becomes too heavy or too light, restoring balance by trimming the heavier side slightly or adding a little to the lighter side.

The NPS does not immediately sell when prices rise to lock in gains or buy as soon as prices fall, he said. He described the pension fund as a "universal owner" that grows alongside South Korea's economy, industries and companies, and said its mission is to serve the public interest and support people's retirement security.

Lee Su, Hankyung.com reporter 2su@hankyung.com