The Butterfly Effect of the National Pension Service's Rebalancing Failure
Machine translated
The National Pension Service (NPS) primarily invests in
- 1. Stocks and 2. Bonds.
By the end of June, the NPS only bought domestic stocks and did not sell any.
As a result, the NPS's domestic stock holding ratio
hit an all-time high.
Because they held excessive domestic stocks,
the proportion of bond investment decreased.
As the NPS's bond purchasing volume decreased,
bond sales volume also dropped.
To sell bonds,
they had no choice but to increase bond interest rates.
Ultimately, this led to an increase in bond interest rates
(interest rate hikes).
One of the most famous sayings in economics is:
"There is no such thing as a free lunch."
The result of artificially boosting the KOSPI
using the public's retirement funds
is starting to return as an expensive bill...
As interest rates rose: - The interest burden on citizens' collateral loans increased,
and as much as the interest expenses grew,
household consumption decreased.
Naturally, the decrease in consumption led to a domestic economic recession.
Companies often invest
using borrowed money,
but since interest rates rose,
corporate investment decreased accordingly.
While they say the stock market is in a great boom, - households are decreasing consumption and
- companies are reducing investment.
As bond interest rates rose,
bond yields also increased,
causing funds that were intended for stocks
to flock back into bonds,
which became a factor in the KOSPI's decline...
As a result of the NPS failing to rebalance,
the KOSPI rose, but
as a reaction, interest rates rose,
household consumption decreased,
corporate investment declined,
and the real economy ended up worsening instead.
The evaporation of 181 trillion won from the NPS is a bonus...
Who exactly is this stock market stimulus for?
If principles change depending on mood or situation,
it is no longer a principle.
The public's retirement funds are currently
on the wrong path.
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