Goldman Sachs: A 1% increase in the weight of Samsung and Hynix may lead to foreign capital withdrawing approximately $2 billion from the South Korean market.

Timothy Moe and John Kwon of Goldman Sachs pointed out that for every 1 percentage point increase in the combined weight of Samsung and SK Hynix in the South Korean stock index, foreign investors may withdraw approximately $2 billion from the South Korean market, as the U.S. Investment Company Act requires portfolios to meet diversification thresholds. Goldman Sachs also stated that a large influx of funds into leveraged ETFs, coupled with an increase in options trading and margin retail trading, has created a structural environment where daily price fluctuations exceed what can be supported by the fundamentals of companies. South Korea's asset management growth since last year has mainly come from investment gains, rather than new funds. With valuation climbing, institutional investors' mechanical exposure to market volatility is also increasing - often related to hedging strategies. This means that even a moderate market pullback could trigger a series of forced sales.