The National Pension Service (NPS) rebalanced its portfolio during the volatile first quarter of this year, focusing on undervalued stocks and defensive plays, according to an analysis of its stock holdings.
While the investment focus remained tilted toward large-cap KOSPI stocks, the pension fund expanded its buying of semiconductor materials, parts, and equipment stocks on the KOSDAQ market for the second consecutive quarter.
An analysis of NPS's first-quarter large shareholding disclosures released on the 14th showed 142 stake increase filings in the domestic stock market—96 on KOSPI and 46 on KOSDAQ. This represents a 31-filing increase from the previous quarter's 111, with nearly 70% concentrated in KOSPI stocks, continuing the trend of expanding positions in large-caps.
Under the Capital Markets Act, NPS must disclose when it holds 5% or more of a specific company's shares or when its stake changes by 1 percentage point or more.
On the main bourse, Paradise, a casino operator, saw the largest stake increase from the previous quarter, rising 4.24 percentage points from 7.13% to 11.37%. This was followed by Handsome (6.29% to 9.55%), Hanwha Vision (7.44% to 9.66%), and Kolon Industries (7.74% to 9.89%), all showing steep increases.
Conversely, stakes in IT sector companies were generally reduced, including Douzone Bizon (8.22% to 0.94%), where NPS recovered its investment by participating in a tender offer by majority shareholder EQT Partners, as well as Samsung SDS and ISU Petasys.
A notable aspect is the significant accumulation of undervalued stocks in the domestic market. Paradise, which recorded the largest stake increase, has a price-to-book ratio (PBR) of 0.81, well below the KOSPI average of 1.86. Handsome (0.36) and Kolon Industries (0.76) also trade at significantly lower levels compared to competitors in the same sectors. Among the nine newly added companies, six had PBRs below 1.
President Lee Jae-myung previously emphasized the need for share price normalization, stating that "PBRs lingering at 0.3 to 0.4 times are abnormal." The Financial Services Commission is also pushing to publish a list of low-PBR companies semi-annually starting July and to tag such stocks accordingly.
By sector, stake expansion continued in chemicals and refining. Daehan Oil, Unid, and S-OIL all saw stakes increase by approximately 1 percentage point. This represents increased weighting in cyclical stocks with modest valuation burdens.
Financial stocks also saw expanded holdings, including KB Financial Group (105560.KS) and DB Insurance, as expectations grew for shareholder returns through share buybacks and dividend increases alongside earnings resilience.
"In the recent environment of heightened volatility on the main bourse, the focus appears to be on stable management centered on defensive stocks," a financial investment industry official said.
Meanwhile, on KOSDAQ, selective buying was prominent among semiconductor materials and equipment stocks. Stakes increased in Hana Materials (5.01% to 6.11%), VM (5.05% to 7.05%), and Korea Circuit (5.05% to 6.38%). NPS newly added these stocks in the fourth quarter of last year, triggering disclosure requirements, and further expanded its positions this quarter.
These companies belong to the semiconductor process materials and parts supply chain and are identified as representative sectors expected to benefit from trickle-down effects of AI and data center demand expansion.
"The materials, parts, and equipment sector will see solid earnings in the first half due to new factory investments by Samsung Electronics (005930.KS) and SK hynix (000660.KS)," said Kim Rok-ho, a researcher at Hana Securities. "We recommend using periods of share price decline due to external variables as opportunities to expand positions."
