South Korea’s National Pension Service is cutting its overseas stock allocation by an estimated $20 billion this year, a sharp retreat from its original plan. The world’s third-largest pension fund is recalibrating its portfolio in response to the Kospi’s blistering rally and the won’s decline.

This shift marks a significant reallocation for a fund managing over 900 trillion won. A stronger domestic equity market makes local stocks more attractive, while a weaker currency increases the cost of foreign investments. The move could reduce capital flows into global markets and bolster liquidity on the Seoul exchange.

Investors will watch how the fund deploys the capital domestically and whether other large Asian pension funds follow suit. The decision underscores the tension between global diversification mandates and local market opportunities, with potential ripple effects for asset managers and Korean exporters.