South Korea’s National Pension Service, steward of about 1,610.4 trillion won ($1.07 trillion) in assets, raised its domestic‑equity target for 2026 to 20.8%, up from the 14.9% ceiling set in January. The boost comes as the Kospi rally pushed the fund’s holdings toward the legal ceiling. The move follows a health‑ministry briefing after the fund’s management committee met on Thursday.

To stay within the cap, the NPS trimmed its overseas‑stock allocation to 34.7%, down from 37.2%. Shifting weight back into Korean shares reduces the risk of compulsory divestiture that could depress prices and signals confidence in domestic corporate earnings growth. The adjustment also aligns the portfolio with the government’s broader push to channel pension savings into domestic growth sectors.

The pension fund controls roughly 1.6 quadrillion won of Korean equities, making it one of the market’s biggest single investors. Its reallocation could provide a steady demand source for blue‑chip stocks, supporting the recent rally while limiting supply for other institutional buyers. Analysts note that the NPS’s buying power can influence index composition, potentially lifting mid‑cap stocks that have lagged the rally.

Regulators monitor the NPS’s position because breaches trigger forced sales that can add volatility. By voluntarily expanding its domestic stake, the fund cushions the market against sudden outflows and underscores a strategic tilt toward home‑grown growth assets. This proactive stance may also ease pressure on other funds that rely on the same liquidity pool, reducing the chance of a cascade of sell orders.