Despite the fact that the TOPIX index regained historic highs on Thursday last week (July 4), a large increase in margin buying positions by individual traders may create resistance for semiconductor manufacturers, electrical utilities, and some growth stocks.
Although the data released last week showed a slight decrease, outstanding margin buying positions are still near a 18-year high, which could slow down the increase of the Nikkei 225 Stock Average Index (which has a narrower index range including many large Japanese technology and growth stocks).
(Source: Bloomberg)
Chipmakers have been at the center of a buying frenzy triggered by AI, but such frenzy can easily be subject to some degree of impact. Tokyo Electron Ltd. is Japan's largest chipmaking machinery manufacturer, and its margin buying volume has increased by 47 billion yen ($293 million) since the end of last year, the highest increase among companies in the TOPIX 500 index.
After Tokyo Electron and other chip-related stocks hit their highs in March and April, they became sluggish, which also caused the Nikkei index to underperform compared to the TOPIX index.
"Prices of stocks related to chips have already been restricted. The lifting of margin positions may bring pressure to these stocks," said Kitazawa Jun, deputy general manager of the investment information division at Sumitomo Mitsui Securities Co.
For some power company stocks, the impact of margin positions may be greater, and these stocks have temporarily risen due to bets on increased demand for electricity from chip manufacturing and datacenters related to AI.
So far this year, the margin buying position of Tokyo Electric Power Co. ranks eighth in the TOPIX 500 index. Hokkaido Electric Power Co.'s long margin buying position has increased to 1.8% of its total market value since surging in April.
(Source: Bloomberg)
Shift Inc. is an IT services stock favored by some investors, but with its stock price steadily declining, margin buying positions have significantly increased, which means that further declines in its stock price may force investors to cut losses and sell.
Other companies that margin investors are betting on include chip-related stocks, such as Lasertec Corp., Disco Corp., Screen Holdings Co., Mitsubishi Heavy Industries Ltd., and Hitachi Ltd. Sponsored ADR.