Citadel Securities is perfect for Asia’s Nasdaq chase

Shuli Ren, Bloomberg

Investors in Asia have long traded US stocks, sometimes staying up until midnight to follow price movements in New York. But as chipmakers’ shares witness a historic rally, some are finding lucrative opportunities in their own time zones. The question is which brokerages can provide this liquidity.

While everyone wants in, few Asia-based brokerages have enough US business to make it work. That’s what makes Citadel Securities an ideal candidate. Ken Griffin’s market maker is expanding in the region and plans to allow Asian clients to trade US equity blocks. The so-called “high touch” business handles fewer but much larger trades, often requiring human intervention to minimize market impact. It’s a departure from the brokerage’s core algorithmic trading business, but also more profitable.

Asian clients will welcome this offering. From Intel to Advanced Micro Devices, most companies on the Philadelphia Semiconductor Index report earnings after the US market closes at 4 p.m. New York time — or 4 a.m. Hong Kong and 5 a.m. Tokyo — with investor calls usually following within an hour. It’s a sweet spot for Asia’s early birds.

This earnings season has been eventful. We’ve seen sharp reversals in after-hours trading, creating lucrative opportunities.

Chip designer Arm Holdings, controlled by SoftBank Group, is a good example. On May 7 Asia time, the company released quarterly earnings after the US market closed. Its stock initially surged as much as 13% after revenue and earnings topped estimates. But that enthusiasm evaporated as the earnings call began, swinging to roughly a 10% decline by around 6 a.m. Hong Kong time.

Management revealed that while demand for its new AGI CPU products was strong, supply-chain constraints meant it could only maintain existing guidance. Arm, which traditionally licenses CPU architecture to companies like Nvidia, recently decided to manufacture chips itself. Management’s comments validated investor skepticism about whether the company could secure enough suppliers. Traders who looked beyond the headline numbers would have done very well that morning.

A related question is why Asians are buying US stocks when much of the AI supply chain originates in Japan, South Korea and Taiwan. Again, liquidity matters. Consider memory chipmakers Micron Technology, Samsung Electronics and SK Hynix. During regular sessions, Micron’s daily turnover is far higher, even though its market cap is the smallest. Over the past month, average daily transactions topped $21 billion. That makes it easy for an Asian hedge fund to execute, say, $100 million worth of trades with minimal slippage.

Going forward, investors’ tug-of-war over AI chipmakers will intensify as new earnings seasons unfold. Expectations are high, and a simple consensus beat is no longer enough to move prices — as seen with Arm and Teradyne, a chip-testing equipment supplier that suddenly became a market fixation. Investors will dissect every earnings-call comment to gauge how quickly chipmakers can turn demand into profits.

Citadel Securities has thrived as a liquidity provider, posting record trading revenue during bouts of volatility, including those linked to President Donald Trump’s tariff policies. With the AI-driven Nasdaq rally now in its fourth year, the firm’s expansion into Asia could prove both timely and highly lucrative.

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Courtesy Bloomberg/Shuli Ren