SMBC Nikko Securities analysts have projected a potential 3 trillion, or $18.5 billion, of passive inflows into Kioxia Holdings Corp. (KXIAY), a Japanese memory chipmaker, as its weighting in the benchmark Topix index could rise sharply in the October rebalancing. In a July 3 report, SMBC quant analysts including Hayato Yoshida estimated that Japan Exchange Group Inc., the operator reassessing Topix free-float ratios, may lift Kioxia's free-float ratio to 50% from 15%. That move would more than triple Kioxia's Topix weighting to 2.678%, potentially forcing index-tracking funds to buy the stock.
The scale of the potential buying is notable. SMBC Nikko said the estimated passive flow would roughly match Kioxia's 30-day average daily turnover and described it as potentially unprecedented, while adding that the adjustment may be staggered to reduce market impact. This could provide an important near-term support factor for Kioxia shares, which surged more than 940% this year through last month's peak before pulling back about 25% as concerns over an AI bubble increased.
The possible Topix boost also reflects a meaningful shift in Kioxia's shareholder base. Kioxia's June annual securities report showed that the combined stake held by its top 10 shareholders, including Toshiba Corp. and Bain Capital, declined to 53% from 89% in the previous fiscal year. For investors, the bigger story is that Japan Exchange Group's Topix reform could increasingly reward large, liquid stocks while pressuring smaller, less actively traded names, with NLI Research Institute estimating that Topix constituents may fall to fewer than 1,000 from more than 1,600 currently. Tokai Tokyo Intelligence Laboratory analyst Shota Sando noted that passive buying may not necessarily lift highly liquid large-cap stocks, while selling pressure on excluded names could be substantial because the market has been slow to price in the potential impact.