▲ Kioxia website in Japan
At least nine leveraged exchange-traded funds (ETFs) linked to the share price of Japanese NAND flash manufacturer Kioxia Holdings are poised to be listed in the United States.
As this marks the first time a single-stock leveraged ETF for a Japanese company is being listed, it is anticipated that the volatility of Kioxia's stock price will amplify further.
Bloomberg reported that at least nine ETFs awaiting approval aim to track either twice the daily return or twice the inverse return of Kioxia's share price or American Depositary Receipts (ADRs).
Among them, products introduced by Tuttle Capital are scheduled to be listed as early as next month.
Matthew Tuttle, CEO of Tuttle Capital, stated that alongside U.S. investors, interest from South Korean investors is also significant, with South Korean capital accounting for about one-third of the assets under management.
Kioxia, a leading Japanese semiconductor stock, is considered one of the most volatile among major Japanese equities.
Kioxia's share price soared to 112,700 yen on the Tokyo Stock Exchange early last month, making it Japan's top company by market capitalization, but it has since tumbled to 52,500 yen as of the morning of the 27th amid growing concerns over AI overinvestment.
In less than two months, the stock has plummeted by 53.4% from its peak.
Riding the AI boom, the global leveraged ETF market has expanded to 270 billion dollars (approx. 396 trillion won).
In addition to Kioxia, Tuttle Capital is preparing products linked to SoftBank Group, Nintendo, and Metaplanet, while Direxion is preparing products linked to Tokyo Electron and Toyota Motor, showing a trend of leveraged ETF listings spreading across major Japanese large-cap stocks.
The reason these products are being listed in the United States rather than Japan is due to regulatory constraints within Japan.
Under current regulations, single-stock leveraged ETFs fail to meet diversification requirements and are therefore not permitted to be listed for public offering in Japan.
This volatility is spreading across the entire Japanese stock market, which had been sidelined by global investors for years.
Looking at the annualized volatility indicator over the past 30 trading sessions, the Nikkei 225 index exceeds 37%, which is higher than Hong Kong's Hang Seng index (22%) or the S&P 500 index (13%).
Kospi's volatility indicator is even higher at 75%.
Cited as a factor driving index volatility, new listings of Samsung Electronics and SK Hynix leveraged ETFs have been suspended.
(Photo: Capture from Kioxia website)
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