$Direxion Daily MSCI South Korea Bull 3x Shares(KORU)$ KOSPI closed up 1%. It's not a huge gain, but it's significant given the potential pressure from the National Pension Service (NPS) rebalancing.
Here's what's been happening:
- The domestic stock holding cap was raised from 14.9% to 20.8%.
- The additional buffer was increased from ±3% to ±6%.
- An extra 2% flexible band is also allowed.
- In total, NPS can hold up to 20.8% + 6% + 2% = 28.8% of domestic stocks. This fund is essentially equivalent to a Social Security fund.
Expert speculation is that due to the rapid rise in Samsung and SK Hynix shares, the domestic holdings are estimated to have grown to around 30% to 31.4%, exceeding the 28.8% cap.
Analysts estimate that NPS has been selling about $650M per month for the past 6 months, but still has an overage of $10B to $45B to address.
NPS's goal is to rebalance with minimal market impact.
Recently, NPS has paused selling at certain levels, allowing KOSPI to recover.
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