On July 21st, Japanese and Korean stocks: retail investors began to surrender, domestic institutions in South Korea began to buy, and foreign investors continued to buy after yesterday; Investors' custodial funds have significantly increased or decreased, resulting in a noticeable decrease in R2. Today, the overall rebound of the Korean stock market is worth paying more attention to the changes in funds behind the rebound. 1. The explicit financing debt has slowed down, and investors have significantly increased their custody funds On July 2nd, credit financing only decreased by 29.8 billion Korean won, which is in stark contrast to the daily decrease of about 1 trillion Korean won on July 16th. After a rapid repayment or forced reduction of positions in the early stage, the financing turnover temporarily slowed down on July 20th. In contrast, investor custody increased by 4.4371 trillion Korean won, and R2 (investor custody/credit financing balance) significantly decreased by about 1.24 percentage points, from 30.87% the previous day to the latest 29.62%. This type of improvement is valuable because more account cash means that the market has greater potential margin replenishment capacity, investors do not have to immediately sell stocks to raise cash, and the pressure on securities firms' collateral may decrease. 2. The important behavioral shift is that retail investors are beginning to surrender On July 21st, individual investors of KOSPI sold a net of approximately 1.66 trillion Korean won, while institutions and foreign investors collectively bought a net of approximately 1.70 trillion Korean won. This capital structure is healthier than previous days of sharp declines. Previously, it was common for: Foreign capital and institutions sell, while retail investors continue to buy ETFs with the help of cash, financing, and leverage. Risks continue to shift from institutional balance sheets to residential sectors. On July 21st, there was a reverse transfer: Retail investors reduce their spot positions, while foreign capital and institutions take on stock risks. If this structure continues to occur, it usually means that the most vulnerable positions are shifting towards investors with longer funding terms and more stable balance sheets, which is good for medium-term stability. It is worth noting that the top three net purchases of individual investors' ETFs are all leveraged or reverse leveraged products: SOL SK Hynix single stock leveraged ETF, net purchase of approximately KRW 60 billion; KODEX KOSDAQ150 leverage; KODEX 200 futures reverse 2 times. This means that retail investors sell their stocks while using leveraged products to establish long or short directional trades. This means that individual investors have reduced their spot positions, but there has been no complete risk exit; Part of the risk has shifted from ordinary stocks to leveraged ETFs and reverse ETFs. From the perspective of market volume, the simultaneous increase of long and short leverage will still increase the total nominal exposure and daily rebalancing trading volume. Of course, a reverse 2x ETF also has a hedging effect, and the net directional risk will decrease. 3. KOSPI and KOSDAQ show differentiation KOSPI institutions have started to undertake, while KOSDAQ is still being undertaken by individual investors. Overall judgment: Compared with before, the Korean stock market has shifted from a "one-way high-pressure sell-off" to a stage of "cash buffer repair, institutional absorption, and retail spot reduction", and the liquidity safety cushion has significantly improved, which is a positive change in the deleveraging process. However, there may be some fluctuations in the emotions and productization leverage that have not yet been cleared. This article is sponsored by @ bitget_zh, titled 'Bitget Buying US Stocks: Instant Entry, Smooth Trading'