On July 20th, Japanese and Korean stocks: Credit financing substantially accelerated its decline, and foreign investment began to buy into domestic institutions in South Korea to continue risk contraction. A few days ago, here https://(x.com)/qinbank/status/2078431440258441606 provided a detailed overview of the degree of deleveraging in Korean stocks. Today marks another trading day, and we will discuss the latest developments: 1. Credit financing is accelerating its transformation A few days ago, we talked about the data as of July 15th. KOSPI has fallen by about 25%, but the credit financing balance has only decreased by about 11%. The typical stock price has fallen quickly, while debt has fallen slowly. I have reviewed the data from last Thursday, July 16th (with the Korean stock market closed on the 17th). The credit financing balance decreased from approximately 34.3702 trillion Korean won on July 15th to 33.3624 trillion Korean won on July 16th, a decrease of approximately 1.01 trillion Korean won in one trading day. The deleveraging of the balance sheet has finally accelerated, with a daily decrease of 1 trillion Korean won, indicating that deleveraging is no longer just about stock price declines and ETF net asset values shrinking, but has begun to enter a real stage of financing repayment, active reduction of positions, or forced liquidation. 2. Foreign investment begins to make small purchases of domestic institutions in South Korea, continuing to shrink risks On July 20th, KOSPI fell 4.46%. According to KOSPI's closing statistics, individuals and foreign investors net bought 351 billion and approximately 523.5 billion Korean won respectively, while institutions net sold approximately 921.7 billion Korean won. Foreign investors also bought approximately 351 billion Korean won worth of KOSPI 200 futures on the same day. On the KOSDAQ side, there is another structure: individuals net bought 190.8 billion Korean won, while foreign investment and institutions net sold 57.7 billion and 134.8 billion Korean won, respectively. The overall summary is: 1) Individual investors continue to buy at the bottom, with a net purchase of approximately 0.54 trillion Korean won 2) Foreign investment has started to make small purchases, with a net purchase of about 0.47 trillion Korean won, but concentrated in Samsung Electronics and SK Hynix 3) Domestic institutions in South Korea have significantly reduced their holdings, resulting in net sales of approximately 1.06 trillion Korean won 4) KOSDAQ: Foreign investment and institutions jointly withdraw, individuals undertake alone Today, the Korean stock market is more like a decline led by domestic institutional risk budget contraction, portfolio reduction, and passive selling, rather than a typical "foreign capital flight day". But the structure of KOSDAQ is weaker because both foreign and institutional investors sell at the same time, relying solely on individual investors to undertake. 3. The exposure of leveraged ETFs has been reduced by nearly half, and the behavior of individual investors has not been truly cleared yet According to Goldman Sachs' statistics, the total managed assets of domestic and foreign Korean single stock leveraged ETFs have decreased from a peak of about $53 billion on June 22 to about $28 billion on July 16, a decrease of 47.2%. This indicates that the market exposure at the product level has undergone significant compression. Samsung Electronics and SK Hynix have fallen by about 34% and 40% respectively from their peak in June, and the daily reset mechanism of leveraged ETFs has further amplified the contraction of asset size. There is a crucial anomaly here, from the end of June to July 14th: The cumulative net inflow of four major Samsung Electronics and SK Hynix long leveraged ETFs increased from KRW 12.3 trillion to KRW 15.7 trillion, resulting in a net increase of approximately KRW 3.4 trillion in personal funds. However, during the same period, the AUM of 16 single stock leveraged ETFs decreased from KRW 16.1177 trillion to KRW 10.3828 trillion, a decrease of 35.6%. That is to say, the decline in fund asset size is not due to the comprehensive withdrawal of investors; A large number of retail investors continue to net buy while their net worth shrinks due to the decline and volatility losses of the underlying asset. This is a state where positions are forcibly compressed by the market, but investors subjectively continue to increase their holdings. Some data has not been released yet today, and we will continue to observe the data released or reflected from July 21st to 23rd: 1) Will the credit financing balance continue to decline in the daily range of 500 billion to 1 trillion Korean won; 2) Will the forced liquidation amount be raised again to the level of billions of Korean won; 3) Whether investors' custodial funds continue to be lost; 4) Has there been a true net redemption of leveraged ETFs; 5) Has the KOSDAQ financing offer started to decline faster than KOSPI. Compared to here https://(x.com)/qinbufark/status/2078431440258441606, it is judged that some upgrades can be made: Prices continue to plummet, and credit financing has also begun to rapidly decline by KRW 1 trillion, further increasing the intensity of clearing. Foreign investors are trying to buy instead of just selling. I look forward to seeing signs of stabilization this week.