Japanese Stock Market Also Sees Extreme Volatility—Claims Point to Samsung Electronics and SK hynix

Nikkei: “Japanese Market Feels the Impact of Korea’s Synchronized Trading Hours”
Japanese Memory Firm Kioxia Also Adds to Volatility

Recently, while volatility in the Japanese stock market has been extremely high, local media have drawn attention by citing the “Korean stock market” as the source of this instability. They claim that the high volatility of major Korean stocks such as Samsung Electronics and SK hynix has also impacted Japanese capital markets.

On July 28 (local time), the Japanese daily Nihon Keizai Shimbun (Nikkei) published an article titled, “More Than 2% Daily Swings—Korean Stock Market Drives Semiconductor Shares.” The newspaper reported, “Because the Korean stock market operates in the same time zone and with identical trading hours, the Japanese market is heavily influenced by it.”

Nikkei 225 Average Price Board. Photo by EPA Yonhap News

The Nikkei 225 Average Stock Price Index, comprised of major Japanese companies, fell during intraday trading by about 2,500 yen to 63,000 yen, compared to the previous trading day. At the same time, the KOSPI was down about 8% intraday. Nikkei interpreted this by saying, “With stock prices falling sharply in the Korean market, investor sentiment also deteriorated in the Tokyo stock market.”

This volatility continued even on trading days when the market rose. The previous day, the Nikkei Index at one point surged by over 600 yen but then plummeted by more than 400 yen, finally closing up 320 yen at 64,931 yen. While the closing price did not differ significantly from the previous day’s close, intraday volatility proved steep. As a result, the upper and lower shadows—the wicks—on candlestick charts, which depict price volatility, became longer.

The “intraday volatility,” calculated as the gap between the Nikkei’s highest and lowest intraday prices divided by the previous day’s closing price, has averaged 2.5% this month. This is close to last month’s 2.6%, and it marks the first time since the 2008 global financial crisis that the Nikkei’s intraday volatility has exceeded 2% for three consecutive months. The newspaper explained, “Volatility has become a feature of the Japanese market. It is notable that high volatility has persisted for a long period even without any particular shocks to the financial market.”

Foreign stocks related to artificial intelligence (AI) appear to have also contributed to high volatility in the Japanese stock market. The newspaper particularly identified individual leveraged exchange-traded funds (ETFs) tied to stocks like Samsung Electronics and SK hynix as among the causes. Additionally, increased short-term trading by retail investors was cited as another driver of volatility. Margin trading, where investors borrow money from securities firms, is also problematic. Outstanding margin purchases in Japan have surpassed 6 trillion yen, reaching their highest level ever.

Meanwhile, much like Samsung Electronics and SK hynix, whose memory semiconductor boom has heightened volatility, Japanese memory chipmaker Kioxia has also experienced severe volatility. Shota Yamafuji, an analyst at Tokai Tokyo Intelligence Lab, explained to the newspaper, “Because transactions in Kioxia, which trades at higher unit prices, have increased, this has led to greater volatility in the Nikkei index.”

This content was produced with the assistance of AI translation services.