On July 23rd, Japanese and Korean stocks saw four consecutive days of net buying by foreign investors and continued surrender by retail investors, indicating substantial progress in deleveraging. The Korean stock market is much better today compared to yesterday, 1. Explicit financing debt continues to decline substantially The balance of credit financing decreased from approximately 33.5583 trillion Korean won the previous day to 33.0420 trillion Korean won, a daily decrease of approximately 516.3 billion Korean won, a decrease of approximately 1.54%, and the lowest level since April 10th. Explicit credit financing has removed approximately 5.59 trillion Korean won, equivalent to 14.47% of the peak. This is real balance sheet deleveraging, not just a decline in stock prices, ETF net worth, or market value. Compared to the initial rebound in financing balance on July 21, the re emergence of a 500 billion Korean won level decline on July 22 is a clear positive signal. 2. Debt has decreased, R2 has slightly increased Credit financing decreased by about 1.54%, while investor custody decreased by about 2.64%. The cash denominator contracted faster than the debt numerator. Therefore, the latest R2 has not decreased, but has increased by about 0.36 percentage points. We need a two-way understanding here. On the one hand, individual investors selling stocks and withdrawing funds from their securities accounts indicate that residents' risk appetite is declining, and the potential ammunition for refinancing and bottom fishing in the future is reduced. This itself is also a risk exit. On the other hand, for accounts that still hold financing positions, a decrease in the cash buffer within the system means a reduction in the immediate cash available for margin replenishment; Once the market falls again, it is more likely to be forced to sell securities to raise funds; It can be said that absolute debt is improving, but relative cash leverage has not yet improved. A truly healthy liquidation should be one where financing declines faster than custodian funds, ultimately leading to a continuous decline in R2, rather than just seeing two numbers decline simultaneously. 3. Today's funding structure is healthier than the previous multiple rebounds Today's KOSPI market: Net foreign investment purchase of 2.1486 trillion Korean won; Institutions net purchased 98.6 billion Korean won; Personal net sales amounted to 2.2089 trillion Korean won. KOSDAQ market: Foreign investment net purchase of 133.5 billion Korean won; Institutional net purchase of 60.4 billion Korean won; Personal net sales amounted to 198.2 billion Korean won. This is exactly the opposite of the common structure from late June to mid July. Previously, it was: Foreign investment and institutional sales Retail investors use cash, financing, and leveraged ETFs to undertake → Risk concentration towards residents' balance sheets. On July 23rd, it was: Retail investors selling → Foreign investment and institutional undertaking Part of the risk is transferred from short-term, fragile funds to investors with more stable balance sheets. Individual investors have sold net on KOSPI for three consecutive trading days, while foreign investors have bought net for four consecutive trading days. If this structure can be maintained continuously, it is more conducive to forming a stable bottom than a 4.4% increase in the index itself. I have seen the specific buying targets of foreign investment: Foreign net purchases of SK Hynix amounted to approximately 1.3159 trillion Korean won; Net purchase of approximately 0.3504 trillion Korean won from Samsung Electronics; Both accounted for approximately 77.6% of the net purchases by foreign investors in KOSPI, while foreign investors sold approximately 657 billion Korean won in KOSPI 200 futures. This indicates that foreign investment is mainly selectively undertaking chip leaders, while retaining a certain index hedging 4. Strong consolidation and easing of volatility, supporting the formation of a "vol downward grinding bottom" trend The forced liquidation amount corresponding to the latest unsettled transactions has decreased from KRW 59.5 billion to KRW 14.9 billion, and the proportion of forced liquidation to outstanding payments has decreased from 5.7% to 1.4%. This indicates that the recent round of forced selling pressure on ultra short term credit accounts has significantly eased. 5. Regulatory deleveraging is still in its first stage The measures currently in effect in South Korea's regulatory framework mainly include: Suspend the listing of new single stock leverage, reverse and related products; Securities firms and asset management institutions are prohibited from conducting advertising and promotional marketing. The rules that truly constrain the addition of funds have not yet taken effect: Starting from around August 5th, the minimum basic deposit will be increased from KRW 10 million to KRW 30 million; Starting from around August 19th, only cash will be recognized, and alternative securities such as stocks and bonds will no longer be recognized; The plan for November is to increase the number of trading units from 1 to 20. Therefore, the observed decrease in financing and individual net sales as of July 23 is mainly due to changes in market prices, losses, and risk preferences, rather than the full effect of the 30 million Korean won cash threshold. On July 23rd, the proportion of single stock leveraged product transactions still reached 40.41%, indicating that suspending new products and prohibiting marketing are not enough to immediately reduce the trading heat of existing products. The policy effect of truly restricting the re leveraging of the rebound is expected to become clearer in August. In short, today there are simultaneous appearances of: The amount of forced liquidation has significantly decreased; VKOSPI continues to decline; Retail investors' net sales of inventory; Foreign investment and institutional undertaking; The breadth of the rising market has significantly improved. These are typical signals of 'forced sellers are decreasing', with explicit financing continuing to sell, the recent round of strong consolidation easing, weak hands beginning to transfer spot risks to foreign capital and institutions, and volatility also beginning to decline. The final clearance is more likely to be completed through "occasional sharp drop test+subsequent gradual decline in vol", rather than the ultimate collapse of another single day drop. The remaining clearance can be gradually completed through financing decline and vol decline. Take a look at tomorrow's data: If credit financing does not increase again after the Korean stock market rises 4.4% today, or even continues to decline, the quality of this rebound will be significantly higher than previous rounds of mechanical rebounds; On the contrary, if the financing balance and leveraged ETF subscriptions quickly rebound, it indicates that the market is borrowing to rebound and re leverage. Overall, did you really see this tweet from a few days ago today at https://(x.com)/qinbufark/status/2079158544147050685? The last thing I said was that there was a signal of stabilization within this week. This article is sponsored by @ bitget_zh, titled 'Bitget Buying US Stocks: Instant Entry, Smooth Trading'