Quick Menu
contents
menu
Nation Symbols Korean Twitter

Press Release

NPS on Recovery Path after Q2 Loss amid Tight Monetary Policy and Prolonged Geopolitical Uncertainty

  • Date : 2022-08-30
  • Hit : 6185

NPS on Recovery Path after Q2 Loss amid Tight Monetary Policy and Prolonged Geopolitical Uncertainty

- In the face of falling equity markets and rising interest rates, NPS performed relatively well compared to global peers -

□ The National Pension Service Investment Management, a dedicated fund management arm of the National Pension Service (NPS; Interim Chairman & CEO and Executive Director for Planning, Jungbae Park), announced on August 29, 2022 that the National Pension Fund had a value of KRW 882.7 trillion as of June 30, 2022 and recorded a preliminary return of -8.00% in the first half of the year.

○ By asset class, domestic equities returned -19.58%, overseas equites -12.59%, domestic fixed income -5.80%, overseas fixed income -1.55% and alternative assets 7.25%*.
* Based on money-weighted rates of return

□ The negative returns were driven primarily by widening losses from global equities and fixed income falling in tandem.

○ Such sharp market declines have not been seen in decades since stagflation, marked by slow economic growth and rising prices, in the late 1970s.

○ The long war in Ukraine, worsening supply chain disruptions, high commodity prices, soaring inflation and the Federal Reserve’s aggressive monetary policy tightening all had a negative impact on public market returns.

○ The continued uncertainty over interest rates and inflation fueled by tighter monetary policies by central banks dampened the sentiment of financial market participants worldwide, adversely affecting the performance of the NPS’s equity and fixed income portfolios.

○ Foreign exchange gains arising from the strong U.S. dollar contributed to making up for some losses in overseas assets.

<Changes in Key Indicators in H1 2022 >
* Domestic Equity Market (KOSPI): -21.66%Global Equity Market (MSCI ACWI ex-Korea, USD): -19.03%USD/KRW Exchange Rate: up 9.06%
* Korean 3-year Treasury: up 175.8bp, Korean 10-year Treasury: up 138.6bp
* U.S. 10-year Treasury: up 157.9bp

□ During the volatile period where a steep plunge in global equity markets resulted in lower returns for major global pension funds, NPS achieved relatively good results compared to global peers that disclosed their investment results for the January-June period.

□ Meanwhile, equities rebounded in recent weeks following the previous quarter’s significant declines, while bond markets became stable on the back of a slowdown in the pace of an increase in interest rates.

○ In line with this trend, NPS recovered to record a preliminary return of around -4% as of August 25, 2022.

< Trend of Key Indicators in H1 2022 >

Indicators Q1 End (Mar. 31) Q2 End (Jun. 30) Aug. 25, 2022
Compared to 2021 End Compared to 2021 End Compared to 2021 End
KOSPI 2,757.65 -7.39% 2,332.64 -21.66% 2,477.26 -16.80%
S&P500 4,530.41 -4.95% 3,818.83 -19.88% 4,140.77 -13.12%
Global MSCI ACWI (ex-Korea, USD) 2,039.27 -3.94% 1,718.86 -19.03% 1,815.97 -14.46%
Korea Treasury (3-Year) 2.662% 86.7bp 3.553% 175.8bp 3.535% 174.0bp
U.S. Treasury (10-Year) 2.349% 83.99bp 3.089% 157.9bp 3.104% 159.4bp
Exchange Rate (USD/KRW) 1,210.80 2.13% 1,292.90 9.06% 1,341.40 13.15%
Oil Price (WTI, USD/BBL) 100.28 33.33% 105.76 40.62% 92.52 23.02%

□ “Amid the turmoil in global financial markets, we will focus on risk management to weather the increased market volatility,” says an official of NPS. “We make every effort to capture the best investment opportunities to enhance returns when the global economy is fully recovered.”

<Appendix> National Pension Fund as of June 30, 2022

Appendix : National Pension Fund as of June 30, 2022

□ Fund Status

Revenues KRW 1,164.2 trillion Expenses KRW 281.5 trillion
KRW 710.0 trillion (Contributions, etc.) KRW 271.0 trillion (Pension Benefits) Fund KRW 882.7 trillion
KRW 10.5 trillion (General & Administrative Expenses, etc.)
KRW 881.1 trillion (Financial Assets)
KRW 454.2 trillion (Investment Income)
KRW 1.6 trillion (Welfare Sector and Others)

□ Investment Performance

(money-weighted return, KRW trillion, %)

H1 2022 2021 3-Year (‘19~’21) 5-Year (‘17~’21) Since Inception (‘88~’21)
Return Value Weight Return Return Return Return
Total -8.00 882.7 100.00 10.77 10.57 7.90 6.76
Financial Assets -8.01 881.1 99.82 10.79 10.59 7.92 6.72
  Domestic Equity -19.58 132.0 14.96 6.73 17.55 11.89 8.71
  Overseas Equity -12.59 235.8 26.71 29.48 23.24 16.77 14.05
  Domestic Fixed Income -5.80 310.0 35.12 -1.3 1.26 1.82 4.04
  Overseas Fixed Income -1.55 64.8 7.34 7.09 5.56 4.56 4.75
7.25 135.4 15.34 23.8 12.29 10.92 10.13
  Alternatives
Short-term Assets 1.30 3.1 0.35 1.1 0.85 1.03 3.39
Welfare Sector 0.74 0.2 0.02 -2.19 -2.08 -1.91 5.94
Others 0.29 1.4 0.16 0.46 0.71 0.74 1.45

□ Return in Financial Assets
(time-weighted return, %)

H1 2022 2021 3-Year (‘19~’21) 5-Year (‘17~’21)
Financial Assets -8.03 10.86 10.59 7.54
Domestic Equity -19.64 5.88 17.04 10.97
Overseas Equity -12.59 29.77 23.48 14.49
Domestic Fixed Income -5.81 -1.25 1.32 1.84
Overseas Fixed Income -1.54 7.26 6.39 4.70
Alternatives 7.30 23.97 11.78 10.37
Short-term Assets 1.80 1.69 0.84 1.17

□ Market Indicators

Indicators 2021 2022
Year-End Y-O-Y Q2-End Compared to 2021 End
KOSPI 2,977.65 3.63% 2,332.64 -21.66%
S&P500 4,766.18 26.89% 3,818.83 -19.88%
MSCI ACWI (ex-Korea, USD) 2,122.93 19.38% 1,718.86 -19.03%
Korean 3-year Treasury 1.795 82.5bp 3.553 175.8bp
U.S. 10-year Treasury 1.510 59.7bp 3.089 157.9bp
USD/KRW Exchange Rate 1,185.50 8.96% 1,292.9 9.06%
Oil Price (WTI, USD/BBL) 75.21 55.01% 105.76 40.62%
width 1400px
width 1180px
width 768px - 1179px
width 767px