South Korea to review pension fund portfolios amid FX volatility, stock rally

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SEOUL, Jan 26 : South Korea's Welfare Minister said on Monday that the ministry will discuss ways to improve the National Pension Fund's investment portfolios in response to heightened currency market volatility and a rally in the domestic stock market.

"Today, we will review our portfolios in light of recent developments in the stock market, the unprecedented rise in the domestic stock market, and the high exchange rate, and discuss ways to improve them," Jeong Eun-kyeong said at the fund's management committee meeting in Seoul.

The Welfare Ministry oversees investment policies of the NPS, the world's third-largest public pension fund, which has been increasing overseas investment for years to seek higher returns, raising dollar demand in the onshore currency market.

President Lee Jae Myung told a press conference last week that authorities expect the won to strengthen to around the 1,400-per-dollar level in a month or two, though he said that domestic policies alone would not be able to stabilise the foreign exchange market.

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The welfare ministry and the NPS have been in consultation with foreign exchange authorities since November, after setting up a consultative body to discuss ways to balance the fund's returns and foreign exchange stability, as the won hovered at its weakest levels since 2009.

The NPS initiated a new round of strategic foreign exchange hedging operations late last month, as part of broader policy efforts to stabilise the won, after the welfare ministry decided to hedge currency risk more flexibly.

The NPS held 1,427.7 trillion won ($991.31 billion) in assets as of end-October, with overseas assets accounting for 58 per cent of the total.

($1 = 1,440.2100 won)

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