South Korea market watchdog highlights pension fund’s role in market reforms By Reuters

SEOUL (Reuters) – The head of South Korea’s market watchdog stressed on Thursday the importance of the public pension fund’s role in the success of ongoing capital market reforms, nudging the fund to invest more in the domestic market.

“The responsible role of pension funds and asset management firms as long-term investors is paramount to expand the base of investments in the capital market,” Lee Bok-hyun, governor of the Financial Supervisory Service (FSS), said.

Lee cited the assessment of market participants that increasing investments in domestic markets by Japan’s public pension fund had contributed to the success of its market reforms.

In February, South Korea unveiled a “Corporate Value-up Programme,” mirroring Japan’s capital market reforms, to boost the domestic stock market with measures to encourage more shareholder returns by listed companies. It has come up with several follow-up measures, including tax cuts, to beef up the programme, since then.

Lee’s comments came at a forum co-hosted by the FSS, the National Pension Service (NPS), the world’s third-largest pension fund with 1,147.0 trillion won ($857.12 billion) in assets as of the end of June, and the Korea Exchange.

The NPS in recent years has been aggressively raising investments in overseas assets in a bid to get higher returns and delay the depletion of the fund. Its funds are expected to run out by 2056 due to a fast-ageing population.

The NPS in March said it would make a decision on whether and to what extent it will allocate its assets for the government’s corporate reform push after assessing details of the plan.($1 = 1,338.2000 won)