NPS reports record loss amid global financial unrest

The Korea Times

The Korea Times

Finance

Wed, September 27, 2023 | 23:42

Markets

NPS reports record loss amid global financial unrest

Posted : 2023-03-03 08:26

Updated : 2023-03-22 13:56

A logo of the National Pension Service is seen in front of its office in Seoul, Thursday. Yonhap

By Lee Min-hyung

The National Pension Service (NPS) reported its worst-ever investment loss in 2022 amid a global financial meltdown, the state-run pension fund said Thursday.

According to data from the NPS, its fund operation division's investments last year achieved an operating rate of negative return of 8.22 percent or a loss of 79.6 trillion won ($60 billion).

"The poor rate of return was attributable to global monetary tightening, the war between Russia and Ukraine and the global financial market crunch," the NPS said in a statement. "But we reduced losses by expanding gains from alternative investments and foreign exchange investments due to a stronger dollar."

By asset, the NPS' investment in Korean stocks reported the largest loss of 22.76 percent. Its investment loss in overseas stocks also stood at 12.34 percent. But it reaped 8.94 percent in returns on alternative investments.

The dismal performance was sparked by the overall financial market doldrums last year. The benchmark KOSPI reported a drop of around 25 percent throughout 2022. The MSCI ACWI ex-Korea index also fell by 17.91 percent last year.

After the U.S. Federal Reserve started its hawkish monetary policies early last year, global asset markets returned most of their gains made during 2020 and 2021.

"A series of exceptional situations arose last year from then-widening uncertainty (of the global financial market), which brought negative effects on stock and bond markets," NPS Chairman Kim Tae-hyun said. "But the financial market is forecast to recover this year and our profitability will also take a turn for the better."

mhlee@koreatimes.co.kr