The National Pension Service (NPS) has reduced its stake in Korean Air to 7.89 percent by selling part of its 11.36 percent stake as its stock price plunged due to the coronavirus pandemic, PAXNet News reported on June 9 citing investment banking sources.
Bank sources estimated the Jeonju-based pension giant returned minus 30 percent on its investment in South Korea’s biggest airline, losing about 25.6 billion won ($21.5 million), according to local media.
The stock price of Korean Air averaged 27,217 won, trading between 25,000 and 30,000 won, when NPS aggressively began to buy its shares in the fourth quarter of last year. However, the share price plunged earlier this year right after the coronavirus outbreak, even once touching 12,800 won.
Considering the average share price of Korean Air was 19,740 won from February to May this year when NPS offloaded its 3.47 percent stake, it means that NPS sold the stocks about 30 percent cheaper than the price it had paid when it bought them, sources estimated. They added that NPS seems to have wanted to avoid additional financial losses it may risk facing when the stock price falls again.
NPS reported last month that it returned minus 6.08 percent on its investments in the first quarter, with equity markets dragging down performance. Its assets shrunk to 698.3 trillion won ($586.5 billion) as of March 31 from 737.4 trillion won in February. NPS attributed the poor performance to the sharp decline of stock markets at home and abroad due to the coronavirus.
The investment loss from Korean Air is believed to have accounted for a large portion of the NPS’ first-quarter loss on domestic stock investment. Of the 133 companies NPS is now investing in, it has acquired double-digit stakes in only 15 companies, including Hyundai Department Store at 13.50 percent, according to data published by NPS. (Reporting by Jinwon Lee)