Bloomberg：铠侠融资买入余额约9200亿日元居东证之首，去杠杆抛压或延续至12月，但低估值与2万亿日元被动流入构成对冲

Kioxia Holdings Corp. shares face further downward pressure because of a buildup of positions from investors who borrowed to buy the stock on the assumption it would rise, and now may need to sell at a loss.

Outstanding leveraged long positions in the stock totaled about ¥920 billion ($5.8 billion) as of Oct. 15, the largest among all companies listed on the Tokyo Stock Exchange, according to data from the bourse. Meanwhile, trading activity in Kioxia has declined along with its share price, with turnover dwindling by 84% from its peak to ¥766 billion on Friday, leaving some margin traders at risk of being forced to close out their positions at a lower price than they bought in.

“The problem is that margin buying has become extremely bloated,” said Tomoichiro Kubota, chief market analyst at Matsui Securities Co. This is a potential source of downward pressure on the price, and there is risk of a deeper fall if retail investors are forced to dump shares as deadlines on their margin positions approach, he said.

AI-related stocks have been under siege in recent months amid concern that capital spending plans may be outpacing the level of future growth for companies in the sector. Kioxia has been one of the hardest hit stocks, with its share price down 63% from a record high set in June.

Shota Sando, an analyst at Tokai Tokyo Intelligence Lab, estimated the margin balance to remain elevated at least until around the end of December, when those who bought near the highs come due.

Kioxia, which makes NAND flash memory used in AI servers, is one of Japan’s largest stocks by market capitalization. Its influence on the broader market is set to increase after Japan Exchange Group Inc., the operator of the Tokyo Stock Exchange, announced the stock’s weighting on the benchmark Topix index will be increased starting this month.

Short-term investors who had been buying because the stock was rising no longer have the same motivation to purchase the shares, said Takehiko Masuzawa, head of equity trading at Phillipcapital Japan Ltd. Participation by hedge funds and retail day traders has declined, contributing to a drop in trading value, he said.

The company’s earnings outlook, however, remains strong. With NAND prices rising, Kioxia’s net income for the current fiscal year is expected to reach about ¥5.6 trillion, according to forecasts compiled by Bloomberg, roughly 10 times last year. Its 12-month forward price-to-earnings ratio stood at 3.2 times on Friday, near its lowest level since January 2025. That is also below the 6.2 times for US peer SanDisk Corp., leaving the stock looking cheap.

READ: Memory Squeeze Lures Day Traders, Hedge Funds to Kioxia

There are also expectations that the increase in Kioxia’s Topix weighting could generate ¥2 trillion of passive inflows.

Still, there are few drivers that would suggest that trading might return to its previous level of intensity. A decline in volatility has further reduced the stock’s appeal to short-term investors.

Even the stock’s three-for-one split in October, which would normally have been expected to boost liquidity, has had little noticeable impact on trading volumes.