The effect of raising margin requirements in South Korea is evident: retail investors reduce their holdings of leveraged ETFs and turn to spot buying, while Tesla leveraged products turn to net selling According to BlockBeats, on August 5th, the South Korean financial regulatory authorities significantly increased the basic margin for domestic and foreign single stock leveraged products from KRW 10 million including securities to KRW 30 million in pure cash starting from July 31st. As a result, South Korean retail investors began to quickly adjust their investment portfolios. According to data from the Korea Securities Depository, Tesla's twice leveraged product TSLL still recorded a net buy of $14.58 million on August 3, but on August 4, the buy amount dropped sharply from $15.6 million the previous day to $1.56 million, while the sell amount rose to $8.68 million, resulting in a net sell of $7.11 million per day. During the same period, Tesla's net spot purchases reached $42.3 million, which is more than five times TSLL's net purchases. Micron Technology and SanDisk have also shown a similar differentiation - Micron's 2-fold leveraged products have flipped from a net buy of $10.81 million on the 3rd to a net sell of $15.98 million on the 4th, while SanDisk's 2-fold leveraged products have shifted from a net buy of $17.74 million to a net sell of $33.74 million. During the same period, the two companies had net inflows of $148 million and $145 million in spot goods, respectively, indicating a significant trend of funds shifting from leveraged instruments to underlying stocks. This regulatory tightening requires that the basic margin must be paid in cash, and substitute securities such as stocks, ETFs, and bonds are no longer included. Existing investors must also meet the new standards when making additional purchases; Selling is not restricted, but the selling funds must be settled within T+2 days before they can be included in the cash margin. The new regulations were originally planned to be implemented in stages in August, but due to concerns that restricting to Korean products would lead to a balloon effect of funds flowing into overseas leveraged products such as Tesla and Nvidia, the regulatory authorities in South Korea have advanced the implementation date to July 31st and simultaneously covered domestic and foreign products. South Korean investors have strongly responded to this, believing that extending measures aimed at domestic market volatility to overseas products is excessive intervention, and that only South Korean investors are at a disadvantage in global competition by meeting a 30 million Korean won cash threshold. [Original link]