Trading in Korean single-stock leveraged ETFs and sharp moves in Kioxia have added to volatility in Japan’s chip sector, while more U.S.-listed Kioxia products await approval.
Trading in leveraged ETFs linked to South Korean chipmakers Samsung Electronics Co. and SK Hynix Inc. is spilling into Japan’s equity market, intensifying swings in semiconductor names such as Kioxia Holdings Corp. and helping keep the Nikkei 225’s intraday volatility above 2% for a third straight month. The Nikkei 225’s average intraday volatility was 2.5% in July after 2.6% in June, marking the first three-month stretch above 2% since the period immediately after the global financial crisis. Kioxia has been especially exposed to the cross-market moves: its shares rose as high as 112,700 yen in early June before falling to 44,550 yen on July 28, leaving the stock down about half in less than two months as worries mounted over excessive investment in artificial intelligence. Additional pressure on Japanese stocks has come from elevated margin buying by domestic retail investors, with balances above 6 trillion yen, and increased cash trading in individual shares by overseas investors. At the same time, at least nine U.S.-bound leveraged ETFs tied to Kioxia are awaiting approval, with one product from Tuttle Capital Management potentially listing as early as August.