The National Pension Fund (NPF), South Korea's largest institutional investor, is expected to inject some 1 trillion won (870.5 million US dollars) into the stock market this month, financial sources said Thursday, a welcome booster to the market in need of positive energy.
According to the sources, the pension operator is scheduled to select its investment manager by the end of next week, looking for an agent that can focus on value stocks and small- to mid-cap companies. An official at the NPF confirmed the information, saying a review is currently under way.
The NPF currently has invested assets of 100 trillion won.
"There aren't many managers in the country that specialize in value stocks or mid caps. Performance records on securities funds, the level of experience and the size of managed funds will be the assessment standards," one of the sources said.
"Uncertainties ahead of the U.S. presidential election are affecting the local stock market, but there is no big risk of further market falls, given the fundamentals," Oh Seung-hoon of Daishin Securities said. "NPF's money will help set a direction after the market hits its low following the U.S. election."
He added that the investment may work better if it goes to large cap stocks. "Large cap stocks linked to market indexes are the mainstream in the present local market," he said. "Money should flow into these large cap securities to help turn around investor sentiment."
The NPF has about 20 trillion won more that it can use for investment until the end of this year, another potential market booster.