South Korea's National Pension Service (NPS) unexpectedly recorded its first monthly net purchase of the year in the domestic stock market in July, defying widespread fears of a massive sell-off, with SK hynix emerging as the biggest beneficiary.

According to data from the Korea Exchange, pension funds, including the NPS, recorded a net purchase of 68.4 billion won in the KOSPI market from July 1 to 24, marking the first monthly net purchase this year. During the same period, SK hynix saw net purchases of 425.8 billion won, topping the list of pension fund holdings for the second consecutive month.

The market had widely anticipated a potential selling pressure of up to 74 trillion won following the expiration of the NPS's rebalancing exemption for domestic stock holdings last month. However, actual capital flows have clearly diverged from expectations, a shift that provides significant emotional support for the recently pressured South Korean stock market.

Net Purchases Explained: Rebalancing Pressure Naturally Dissipates Due to Price Declines

Pension funds had been net sellers in the first half of this year, with monthly net selling volumes expanding progressively: 1.8911 trillion won in January, 681.6 billion won in February, 764.8 billion won in March, 896.1 billion won in April, 2.1617 trillion won in May, and 2.3370 trillion won in June.

Entering July, capital flows showed a clear shift. In the first half of the year, pension funds were net sellers on more than half of trading days, but as of July 24, there were only 6 net selling days this month.

Securities industry analysts suggest that the recent KOSPI correction caused the assessed value of domestic stocks held by the NPS to decline, reducing the proportion of domestic stocks in total assets and objectively decreasing the need for further reduction. "The index adjustment may have provided an opportunity to buy quality stocks at lower prices," one securities industry source noted.

It is worth noting that there are still remaining trading days at the end of the month, so the possibility of a final net sell cannot be ruled out. However, the market widely believes the probability of a large-scale sell-off like in the first half has significantly decreased.

Holding Concentrated in Semiconductors and Energy, Samsung Group Stocks See Heavy Selling

On the individual stock level, pension funds' buying and selling directions this month show a distinct structural characteristic.

On the buying side, SK hynix topped the list with a net purchase of 425.8 billion won, followed by SK Innovation with a net purchase of 224.7 billion won, S-OIL with a net purchase of 174.4 billion won, DB Insurance with a net purchase of 109.4 billion won, Celltrion with a net purchase of 95.3 billion won, and Korean Air with a net purchase of 89.9 billion won. The semiconductor and energy sectors became the main directions for capital inflow.

On the selling side, SK Square saw the largest net sell-off of 575.7 billion won. Samsung Electro-Mechanics saw net sales of 313.6 billion won, Samsung Life Insurance net sales of 123.8 billion won, LG Electronics net sales of 111.9 billion won, and Samsung Electronics net sales of 111.5 billion won. Multiple subsidiaries of the Samsung Group are prominently featured in the list of net selling.

Official Statements Aim to Stabilize Expectations

In response to market concerns over a large-scale sell-off, South Korean officials have repeatedly made public statements.

NPS Chairman Kim Sung-joo previously stated clearly that there would be no large-scale sell-off in the short term. South Korea's Minister of Health and Welfare, Jeong Eun-kyung, also stated that the government would closely monitor the asset allocation adjustment process to ensure minimal impact on the domestic stock market.

However, analysts also point to potential risks: continued withdrawal by foreign investors and a slowdown in new buying by individual investors could weaken the market's buying base. If the overall capacity of the South Korean stock market is insufficient, changes in the direction of NPS buying and selling could further amplify market volatility.