SEOUL, July 26 (Yonhap) -- Pension funds, including the National Pension Service (NPS), one of the biggest institutional investors in the South Korean stock market, turned net buyers of local equities this month for the first time this year, bourse data showed Sunday.

The NPS and other pension funds bought a net 68.4 billion won (US$46.8 million) worth of shares on the benchmark Korea Composite Stock Price Index (KOSPI) through the first 24 days of July, according to the Korea Exchange.

It marked their first month of net-buying this year after six consecutive months of net selling.

Over the first 17 trading sessions in July, they were net buyers on 11 days and net sellers on six.

With only five trading sessions remaining in the month, analysts said pension funds are likely to remain net buyers through the end of July.

SK hynix was their biggest purchase, with net buying totaling 425.8 billion won. It was followed by SK Innovation at 224.7 billion won and S-Oil at 174.4 billion won.

In contrast, they sold a net 575.7 billion won worth of SK Square shares, as well as Samsung Electro-Mechanics shares worth 313.6 billion won and Samsung Life Insurance shares worth 123.8 billion won.

The buying came despite expectations that the NPS would resume portfolio rebalancing after its temporary suspension ended at the end of June, potentially triggering heavy selling to lock in gains following the KOSPI's sharp rally.

The NPS raised its target allocation to domestic equities to 14.9 percent in January and 20.8 percent in May after the KOSPI has emerged as one of the world's best-performing stock indexes this year, driven by an artificial intelligence (AI)-fueled rally.

The index nearly doubled, climbing to above the 9,000-point mark in mid-June from around 4,300 at the beginning of the year.

However, the market has undergone a correction since late June, hovering around the 7,000-point level for weeks amid heavy foreign selling fueled by concerns over the future of AI investment.

Analysts said the recent foreign outflows and market correction have made the NPS more cautious about carrying out portfolio rebalancing.

"With foreign capital continuing to flow out of the market and inflows from retail investors also slowing, the NPS faced a greater burden in rebalancing its portfolio," an official at a local brokerage said.

Earlier, NPS Chairman Kim Sung-joo reaffirmed the fund's cautious approach to portfolio rebalancing to minimize market impact.

brk@yna.co.kr

(END)

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