Japan's Kioxia set for strong inflows on bigger Topix weighting, but margin selling looms

By Reuters News

By Junko Fujita

TOKYO, Oct 19 (Reuters) - A jump in Kioxia's 285A.T weighting within the Topix index is set to drive strong passive inflows into the Japanese chipmaker, though analysts say any rebound could trigger selling by margin investors.

Here are a few details:

  • Japan Exchange Group said this month that Kioxia's free-float weight will increase to 50% from 15% by the end of November, following stake sales by shareholders Bain Capital and Toshiba

  • Junichi Hashimoto, Daiwa Securities' chief quantitative analyst, estimates this could generate about 2.2 trillion yen ($13.9 billion) of demand from passive investors

  • Kioxia's weight in the Topix will rise to 2% by November from 0.57% as of October 8, according to Akemi Hatano, senior quantitative analyst at Mizuho Securities

  • That compares with 2.39% for Toyota 7203.T and 3.77% for Mitsubishi UFJ Financial Group 8306.T, according to Hatano

  • A surge in Kioxia shares in June made it Japan's largest company by market capitalisation, helping lift the Nikkei 225 gauge to a record high that month. Its shares have since been battered by a shift in sentiment around AI-related stocks and are now more than 60% below their peak

  • Analysts say investors who bought its shares on margin during the rally may cash out as prices recover. Under Japan's margin trading rules, positions must be settled or closed within six months

  • The value of Kioxia shares bought on margin stood at 920 billion yen as of Friday, accounting for about 14% of the total 6.707 trillion yen in shares bought on margin, according to exchange data

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