After offloading more than 5 trillion won (approximately $3.4 billion) in South Korean equities over May and June, the country’s public pension funds have pivoted to bargain hunting, recording a second straight week of net buying as the domestic market tumbled. The shift is largely attributed to recent changes in the National Pension Service’s asset allocation policy, which have alleviated rebalancing-driven selling pressure.

According to the Korea Exchange on July 18, pension funds purchased a net 100.7 billion won (approximately $67.7 million) worth of shares on the main Kospi board this week (July 13-16). This follows net buying of 8.8 billion won (approximately $5.9 million) the previous week, marking two consecutive weeks of net inflows. The Kospi experienced extreme volatility during this period, plunging nearly 9% on July 13, rebounding over the next two sessions, then tumbling more than 6% again on July 16. Pension funds appeared to treat the sharp sell-off as a buying opportunity.

The buying was heavily concentrated in large-cap semiconductor stocks. The most-purchased name this week was SK Hynix, with net buying of 141.2 billion won (approximately $94.9 million). SK Innovation followed at 103.5 billion won, then Samsung Electronics at 80.5 billion won (approximately $54.1 million), and S-Oil at 50.1 billion won. Selective buying also flowed into financial stocks, including Hana Financial Group (44.7 billion won), Samsung Fire & Marine Insurance (38 billion won), and DB Insurance (26.6 billion won).

On the sell side, SK Square topped the list with net selling of 103.3 billion won (approximately $69.4 million). Other notable net sales included LG Innotek (60.6 billion won), Hyundai Motor (39.1 billion won), Hyundai Rotem (33.9 billion won), Samsung Life Insurance (27.8 billion won), KB Financial Group (21 billion won), and Hanwha Ocean (20.4 billion won). Pension funds also took profits on select leisure stocks such as Paradise and Lotte Tour Development.

The semiconductor-focused bargain-hunting trend carried over from the prior week, when pension funds were net buyers of SK Hynix (110.9 billion won), Samsung Electronics (72 billion won), and S-Oil (79.3 billion won), while selling Samsung Electro-Mechanics (169.4 billion won), SK Square (138.4 billion won), and Hanwha Ocean (51.3 billion won). In effect, the funds have been steadily increasing their weight in South Korea’s two chipmaking titans throughout the recent downturn.

The top net buys and sells by pension funds this week are as follows:

CategoryStockAmount (billion won)Net BuySK Hynix141.2Net BuySK Innovation103.5Net BuySamsung Electronics80.5Net BuyS-Oil50.1Net BuyHana Financial Group44.7Net SellSK Square-103.3Net SellLG Innotek-60.6Net SellHyundai Motor-39.1Net SellHyundai Rotem-33.9Net SellSamsung Life Insurance-27.8

Market analysts point to the NPS’s asset allocation policy shift as a turning point for pension fund flows. The NPS recently raised its target weighting for domestic equities to 20.8% from the previous 14.9%, while also widening the permissible range for its strategic asset allocation (SAA). This has substantially reduced the need for mechanical rebalancing-driven selling. Furthermore, the recent Kospi plunge has naturally lowered the domestic equity weighting, further diminishing any additional selling requirements.

“From the NPS’s perspective, the current target range for South Korean equities sits between 15% and 27%, meaning rebalancing-driven net selling is no longer necessary,” said Lee Kyung-soo, an analyst at Hana Securities. “The buying activity pension funds are engaging in during this sharp market decline is theoretically grounded and has historically played a key role in forming Kospi bottoms.”

Beyond simple bargain hunting, the pension funds’ return to net buying is expected to serve as a factor reinforcing downside support for South Korea’s equity market. After having burdened the market with large-scale selling in May and June, the pension funds—buoyed by policy changes—have now re-emerged as a buying force, drawing attention to their potential role as a critical source of demand as the Kospi seeks to establish a floor.