SoftBank rises 5% as yen strengthens

SoftBank shares jumped 5% to ¥6,884 on Wednesday as the yen strengthened toward its highest level in nearly seven months. The gain is notable because much of SoftBank’s market value is tied to dollar-denominated assets that fall in yen terms when the currency rises.

The stock climbed from ¥5,001 on Sept. 3, up almost 38% in the month. Earlier advances included rises of 11.8% on Sept. 4, 11.2% on Sept. 7 and 5.5% on Sept. 8. Traders attributed the rally to a sharp repricing of SoftBank’s exposure to artificial intelligence, citing renewed interest after OpenAI launched GPT-6 Astra and continued gains at chip-design firm Arm.

SoftBank operates largely as an investment holding company. Its official figures showed a net asset value of ¥72.3 trillion as of June 30, with Arm accounting for an adjusted equity value of ¥49.91 trillion. The group is also a major backer of OpenAI, linking its valuation closely to developments in the AI sector and other dollar-denominated tech assets.

A stronger yen reduces the yen-equivalent value of dollar assets. If U.S. dollar holdings rise more slowly than the yen, their value can decline when converted into yen. Despite that effect, the stock rally has continued amid focused gains in Arm and OpenAI-related assets.

The yen traded near ¥153.3 per dollar after strengthening over the past week. Market pricing shifted to expect further Bank of Japan rate increases: the probability of a September rate hike rose from about 65% to roughly 98%, with traders also pricing in another move by December.

MUFG strategist Michael Wan wrote that the recent yen appreciation has been driven by domestic Japanese factors and that emerging markets and carry trades remained “very resilient.” The source of the yen’s strength can affect equity flows, because domestic demand for yen does not always require selling stocks.

The yen has long been used as a low-cost funding currency in carry trades, where investors borrow yen to buy higher-yielding assets abroad, including U.S. technology stocks. When the yen rises and Japanese rates climb, borrowing in yen becomes less attractive. An abrupt unwind of those positions can force investors to sell dollar assets and buy yen to repay loans, amplifying downward pressure on foreign equities.

Adam Turnquist of LPL Financial warned a break below ¥152 per dollar could accelerate the yen rally and lead to more short covering. Market participants say a disorderly deleveraging would increase selling pressure on dollar-linked holdings such as those concentrated in the AI ecosystem.

Analysts and traders note that current flows show investors focusing on specific gains at Arm and OpenAI while accepting some currency headwinds. They caution that a rapid change in risk appetite or a sudden unwind of leveraged positions could alter valuations when dollar assets are translated back into yen.

How SoftBank’s dollar assets perform relative to the yen and the path of Japanese interest rates will influence whether the recent rally is sustained.