South Korean pension funds extended stock sell-offs to a 31st straight session, setting a record selling spree in local market history, data showed Tuesday.

The combined net sales of the pension funds came to nearly 10.47 trillion won ($9.38 billion) -- 10.02 trillion won on the main bourse Kospi and 450 billion won on the tech-heavy Kosdaq -- in the period from Jan. 4 to Tuesday, according to the Korea Exchange.

Their selling volume stood out even more when compared to other major trading groups. Foreign investors sold a net 6.02 trillion won, while small domestic investors loaded on 27.38 trillion won over the same period, the data showed.

The pension funds focused on selling outperforming large-cap stocks that recently hoisted the local indexes. Market bellwether Samsung Electronics was the most-sold stock, net-selling 3.22 trillion won. Hyundai Motor came next at 608.8 billion won, followed by LG Chem and SK hynix with 499.2 billion won and 493.9 billion won, respectively.

Market watchers say the move was fueled mainly by the state-run National Pension Service’s efforts to balance out its investment in domestic stocks in its asset portfolio. Buoyed by the increasing participation of private investors, Kospi crossed the 3,200-point mark for the first time last month. The NPS’ local stock exposure relatively increased amid a strong market rally.

In May last year, NPS vowed to shrink its exposure to domestic stocks to 15 percent of the entire assets by 2025. In line with the plan, the public pension fund decided to cut back on local stock exposure to 16.8 percent by the end of this year from 17.2 percent as of end-2020.

“Korean pension funds have offloaded the unprecedented amount of local shares this year. Since bond prices, which move inversely to yields, have been on a sharp decline from November last year, the NPS allocated a relatively larger portion of its fund to stocks than bonds,” said Ha In-hwan, an analyst at KB Securities.

NH Investment & Securities analyst Noh Dong-kil further predicted that the pension funds are likely to continue massive sellouts from the domestic stock market until at least the first half of this year. But the selling is expected to slow down before June on behalf of NPS, which asset allocation goal has to be reached by the end of the year, the expert added.

“If Kospi moves around the current level (in the 3,000-3,200 range), the pension funds will additionally unload 30 trillion won worth of Kospi shares by the end of this year,” Noh said. “Then their strong selling spree will largely influence the top-cap stocks listed on the main bourse.”

By Jie Ye-eun (yeeun@heraldcorp.com)