After holding an emergency meeting today, the South Korean Ministry of Finance stated that South Korea has promised to take more measures to stabilize the stock market and will take measures to restrict leveraged ETF trading. South Korea will maintain a 24-hour stock market monitoring system and establish legal basis for implementing market stability measures in emergency situations. At the same time, South Korea will strengthen regulation of leveraged ETF trading, limit individual investors' investment exposure to leveraged ETFs, immediately introduce additional regulatory measures for single stock leveraged ETFs, and increase related trading costs to curb ETF speculation. We are still stabilizing order, not saving prices. Now the South Korean regulatory authorities still want the market to clear itself. What are some points that give the South Korean regulatory authorities the confidence not to directly rescue the index? 1) The exchange rate has not been synchronized and out of control The appreciation of the Korean won today indicates that there has not yet been a systemic crisis of deteriorating liquidity in the stock market, foreign exchange, and US dollar. Policy departments have more room to deal with leverage and market mechanisms first, rather than immediately using national funds to support stock prices. 2) The market still has the ability to undertake South Korean institutions net bought about 3.15 trillion Korean won today, while foreign investors simultaneously bought KOSPI 200 futures and KOSDAQ spot, indicating that although market liquidity has been severely damaged, it has not completely failed. 3) The regulatory authorities currently attribute the main problem to leveraged products The policy path previously announced by the Financial Committee focused on margin, investor threshold, rebalancing timing, liquidity provision, and individual investment total limit. The public agenda of the meeting mainly includes additional measures to supplement leveraged products, rather than directly discussing buying stocks. So immediately rescuing the price would create serious moral hazard The stability of the Korean stock market will depend on the situation after the new regulatory regulations for Korean stocks come into effect on Friday, July 31st 1) New regulations cut off newly added bottom fishing funds The new rules will not force existing investors to close their positions, but will significantly increase the threshold for additional purchases. Therefore, the direct impact is not 'forced selling', but rather: Retail investors can no longer easily sell ordinary stocks and immediately buy double leveraged products on the same day; Cannot use stocks, bonds, or ETFs as alternative margin; Unable to meet margin requirements by selling funds as collateral for loans; The inflow of new funds from a single stock leveraged product will significantly decrease. 2) There may be an abnormal 'last trading window' tomorrow, July 30th Due to the new regulations taking effect on July 31st, there may be two opposing forces in the market on July 30th: some retail investors may rush to add leveraged products before the new regulations; The financing pressure and unsettled accounts receivable pressure caused by the sharp decline on July 28th have begun to be released. 3) Mid term bullish trend: Weakening the feedback loop of "selling more as the market falls" The increase in margin, the restriction of daily fund circulation, the dispersion of rebalancing time, and the strengthening of net asset value deviation management will gradually reduce the intensity of the previous negative circulation: The stock has fallen → Decrease in net asset value of leveraged ETFs → The product is forced to reduce inventory → The stock further declines → Retail financing account triggers strong liquidation It is positive for the stability of the mid-term market. The real rescue measures are the entry of stabilization funds, the provision of liquidity by the central bank, increased purchasing power by South Korean institutions and pension funds, and the complete ban on short selling that was implemented two years ago. But I haven't seen it yet This article is sponsored by @ bitget_zh, titled 'Bitget Buying US Stocks: Instant Entry, Smooth Trading'