SK Hynix U.S. Stock Trades 51% Premium to Home Shares in Three Days... 'Repricing in U.S. Market'

SK Hynix’s American Depositary Receipts (ADR) traded at a 51% premium to its Korean shares (home shares) just three days after listing, reflecting high valuations from U.S. investors. SK Hynix ADRs, which listed on the U.S. Nasdaq on the 10th, closed at $193.92 on the 14th (local time), surging 27.29% from the previous day.

The rapid widening of the premium is attributed to U.S. asset managers listing leveraged ETFs and inverse products. Leveraged ETFs have a structure that purchases additional underlying assets whenever funds flow in, sustaining the stock price rally. Additionally, as the Chicago Board Options Exchange (CBOE) listed five types of options with different maturities from July through March next year, demand for hedging and speculative call option buying targeting short-term rises poured in.

Global investment bank Barclays issued a report maintaining an 'Overweight' rating on SK Hynix ADRs with a target price of $330. Through major domestic securities firms, over 84,000 investors purchased 1.36 million ADRs.

However, experts point out that differences in supply, demand, and trading environments between the two markets must be considered. Kim Su-hyun, Head of the DS Investment Securities Research Center, cited the past example of TSMC, analyzing that just as the valuation gap narrowed as the undervalued home shares rose over several years, SK Hynix’s home shares may also undergo a process of gap narrowing. Kim Jae-seung, a researcher at Hyundai Motor Securities, diagnosed that global investors with access to both markets tend to seek out cheaper home shares rather than expensive ADRs. This analysis suggests that even if the ADR price rises, the home shares in the Korean market may not move by the same margin.