Kioxia Holdings Corp. shares are under downward pressure as margin buyers who borrowed heavily to purchase the stock now face potential forced selling. Outstanding leveraged long positions reached ¥920 billion ($5.8 billion) as of Oct. 15, the highest on the Tokyo Stock Exchange. Trading volume has dropped 84% from its peak, with turnover at ¥766 billion on Friday, leaving some traders vulnerable to closing positions at a loss.
Analysts warn that margin buying has become "extremely bloated," increasing the risk of a deeper sell-off as deadlines approach. The stock has fallen 63% from its June high amid broader AI sector concerns. Despite the decline, Kioxia’s earnings outlook remains strong, with net income forecast at ¥5.6 trillion, and its forward P/E ratio at 3.2 times, below US peer San Disk Corp. at 6.2 times.
Its upcoming increase in the Topix index weighting could attract ¥2 trillion in passive inflows, but low volatility and reduced retail participation may limit trading recovery.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing