South Korea’s National Pension Service, Seoul, the nation’s biggest investor, bought stocks Monday when the Kospi index fell the most in more than five weeks following the death of North Korean leader Kim Jong Il.
The 345 trillion won ($296 billion) pension fund doesn’t see further steep declines in equities, Kim Hee Seok, head of the fund’s investment-strategy division, said by telephone Tuesday.
KB Asset Management, a unit of South Korea’s second-largest financial services group, is buying futures on the nation’s bonds, betting losses after Mr. Kim’s death won’t last. Stocks may become attractive if they fall further on geopolitical risk, according to Franklin Templeton Investment Trust Management in Seoul.
South Korean equities and bonds rallied Tuesday after tumbling Monday on concern a power struggle may erupt in the communist North after Mr. Kim died on Dec. 17. A government statement called on North Koreans to “loyally follow” his son Kim Jong Un after saying the nation’s leader died from exhaustion brought on by a sudden illness while on a domestic train trip.
National Pension’s Mr. Kim declined to comment on what stocks the fund bought on Monday.
The Kospi index, which sank 3.4% Monday, closed up 0.9% Tuesday.