Korea's state pension fund loses heavily on investments

SEOUL, Sept. 26 (Yonhap) -- South Korea's state fund posted more than 2 trillion
won (US$1.7 billion) in losses from its investment in the financial sector this
year amid growing volatility in global financial markets, a report showed Friday.
According to the report by the Ministry of Health, Welfare and Family Affairs,
the National Pension Service (NPS) lost 2.16 trillion won during the first eight
months of this year from its investment in stocks, bonds and other financial
products. Its loss rate stood at 0.99 percent.
The loss was attributed mostly to growing volatility in the global financial
market, which sent stock markets at home and abroad into a tailspin.
The NPS logged a loss rate of 20.68 percent from investment in local stocks,
while the corresponding figure for overseas stocks stood at 16.7 percent, the
report showed.
The pension fund, however, posted profit rates of 3.44 percent and 4.76 percent
from local and overseas bond markets.
The NPS is the nation's largest institutional investor, holding more than 230
trillion won under its management. Of that total, it invests 18.3 percent in
stocks and 78.2 percent in bonds.
Last year, the fund reported a 7.05-percent return on assets.
Reflecting the latest market uncertainties, the fund said that it will reduce its
exposure to stock markets and find new alternative investment opportunities.
Recently, the NPS said it plans to increase the portion of stocks in its
portfolio to 40 percent by 2012, while reducing the ratio for bond investment to
50 percent.