Goldman Sachs analysts Timothy Moe and John Kwon say a 1 percentage-point
increase in the combined weight of Samsung and SK Hynix in Korea’s benchmark
equity index could prompt roughly $2 billion of foreign selling, citing US
Investment Company Act diversification thresholds. GS warns that heavy inflows
into leveraged ETFs, rising options activity and increased retail margin usage
have created structural liquidity fragility that can produce daily price moves
well beyond corporate fundamentals. Korea’s asset-management growth since last
year has been driven mainly by investment returns rather than new inflows,
increasing mechanical institutional exposures often tied to hedges; even a
modest market pullback could therefore trigger cascades of forced selling.
