Author: qinbafrank

On July 22, South Korean stocks opened high but fell back: foreign capital continued to buy, retail investors continued to surrender, but the safety cushion decreased. Yesterday's tweet concluded that "there has been encouraging progress in deleveraging in the Korean stock market, but the sentiment and product leverage have not yet been fully cleared, which may lead to some fluctuations." Today, the fluctuations appeared, opening high in the morning, rebounding in the morning, and then dropping across the board in the afternoon. This "strong opening and weak closing" indicates heavy profit-taking, risk control, and position reduction pressures during the rebound.

1. Explicit credit financing has decreased by 13.1%, but the data from July 21 showed a rebound. The most significant deterioration was the reduction in the custodial funds by 58.3 trillion won in one day, and R2 rose again to 31.45%.

Debt slightly increased, cash significantly decreased, and remaining financing positions relative to available account cash have become heavier.

2. On July 21, the amount of forced liquidation corresponding to unsettled trades reached 59.6 billion won, higher than the 52.8 billion won on July 20, maintaining above 50 billion won for two consecutive trading days and the highest level since 81.6 billion won on July 10.

More importantly, the forced liquidation amount accounted for the unsettled amount from:

July 16: 1.1%

July 20: 4.6%

July 21: 5.7%

showing a continuous increase.

Although a full-scale liquidation has not yet occurred, the increase from 1.1% to 5.7% indicates that the passive handling pressure of ultra-short-term credit transactions is increasing rapidly.

This means that high-pressure forced liquidations are still ongoing, but a one-time ultimate clearing has not yet formed.

3. Retail investors continue to surrender, foreign capital continues to buy

1) On July 22, South Korean individual investors:

Net sold about 33.4 billion won of SK Hynix long leveraged ETF;

Net sold about 58.7 billion won of Samsung Electronics long leveraged ETF;

A net total sell of about 92.1 billion won;

At the same time, net bought about 35.7 billion won of SK Hynix inverse double ETF.

Moreover, Samsung Electronics and SK Hynix long leveraged ETFs have been net sold by individual investors for two consecutive trading days.

The long leverage has begun to cool down substantially, but it is not a complete clearance of product leverage, rather it is gradually shifting from unilateral long positions to high-frequency long-and-short strategies.

2) On July 22, foreign capital net bought 26.311 trillion won in KOSPI.

Net bought about 12.563 trillion won of SK Hynix;

Net bought about 5.834 trillion won of Samsung Electronics;

A total of about 18.397 trillion won;

Accounting for about 69.9% of foreign capital's total net purchases in KOSPI.

Thus, foreign capital is not indiscriminately buying the entire South Korean market, but is highly concentrated in the two leading semiconductor stocks.

Overall

Foreign capital is selectively bottom-fishing in leading semiconductor stocks, domestic institutions continue to reduce risks, and retail investors are withdrawing some funds from KOSPI spot and long leveraged ETFs.

Individual selling and foreign capital buying means that some risks are being transferred from the household sector to global institutions, which is generally healthier than the structure of "foreign capital and institutions jointly selling, while retail investors alone bottom-fish."

A conclusion can be drawn:

The Korean stock market is in the later high volatility phase of the fourth stage, undergoing deleveraging rather than a final clearing stage.

Of course, today's overall weakening of Asian stock markets is also somewhat related to the macro environment: the pressures generated from the rising debt, oil, and exchange rates, with the core issue still being oil prices, and there is also the risk aversion ahead of Google's earnings report.

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