Japan Exchange Group Inc. announced that Kioxia Holdings Corp.’s weighting on the benchmark Topix index will rise, fueling expectations that passive inflows will provide support for the shares. JPX lifted the Japanese memory maker’s free-float weight to 50% from the previous 15% in its regular review, suggesting its weighting on the benchmark will expand from the current 0.57%.
The increased weighting could trigger buying from index-tracking funds, with SMBC Nikko Securities Inc. estimating inflows of about ¥2 trillion ($12.7 billion) based on its closing price at the end of August. That exceeds Kioxia’s 30-day average daily turnover of about ¥1.4 trillion. Passive flows are likely to support the memory maker’s shares, which have lost momentum since hitting a record high in June.
To mitigate the potential market impact, JPX will gradually reflect the change in free-float weight in two stages. The weighting will be lifted first to 32.5% on Oct. 30, and then to 50% on Nov. 30. Kioxia’s free float has been rising as major shareholders offload some of their stakes. Its annual securities report released in June showed the combined stake held by Kioxia’s top 10 holders including Toshiba Corp. and Bain Capital fell to 53% from 89%, compared to the previous fiscal year.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing