SK hynix, which made a successful debut on the U.S. Nasdaq market, surged nearly 13% on its first trading day, but its common shares in the domestic stock market plunged more than 10%, showing a decoupling phenomenon.
According to the financial investment industry on the 13th, SK hynix ADR (SKHY), which was listed on the Nasdaq on the 10th (local time), closed at $168, up 12.8% from the offering price ($149). It is the largest-ever fundraising among foreign corporations listed on the U.S. stock market, surpassing Alibaba and others.
Despite the blockbuster catalyst of a surge on its first day on Nasdaq, the common shares on the KOSPI market SK hynix(000660) fell about 10%, showing a stark contrast.
In the securities industry, analysts say a combination of "material exhaustion due to the listing catalyst being priced in" and "concerns about second-quarter results" dragged down SK hynix's domestic share price.
Heo Jae-hwan, an analyst at Eugene Investment & Securities, said of the decoupling phenomenon between the common shares and the ADR, "Basically, there is a strong perception of 'material exhaustion' that expectations from the ADR listing have already been fully reflected in the domestic market."
Heo added, "Funds that realized short-term profits are showing supply-demand moves that are spreading into other sectors with favorable recent momentum."
There is also analysis that trading strategy reports released by some global investment banks (IBs) spurred foreign selling. According to the financial investment industry, UBS, in a report just before the listing, presented an investment strategy to "go long SK hynix ADR listed on the U.S. Nasdaq and short the common shares on the Korea Exchange."
A forecast raised by the domestic securities industry that this year's second-quarter results will miss consensus (market expectations) also put a damper on investor sentiment.
Kang Jin-hyeok, an analyst at Shinhan Investment & Securities, also explained, "Despite the success of SK hynix ADR, reports projecting a miss of second-quarter consensus have emerged, stoking selling sentiment."
Korea Investment & Securities Co. said in a report the same day that for SK hynix's second-quarter results it projects revenue of 80.9 trillion won and operating profit of 60.4 trillion won. While those are stellar results, up 264% and 556% from a year earlier, respectively, they are 8% lower than the market consensus operating profit of 65 trillion won.
Chae Min-suk, an analyst at Korea Investment & Securities Co., analyzed, "Because the share of high-bandwidth memory (HBM) in sales is higher than competitors, the average selling price (ASP) growth rate is lower than the market average." Korea Investment & Securities Co. also revised down its operating profit estimates for this year and next by 9% and 11%, respectively, from previous forecasts. However, the firm noted this should not be read simply as "concerns about a performance peak-out."
Chae said, "This downward revision of estimates is not due to worries about results but the result of making price assumptions more realistic based on already signed long-term agreements (LTAs)," adding, "As the memory industry shifts to an LTA contract structure in three- to five-year units, corporate value will now be determined less by short-term quarterly ASP growth rates and more by 'how long high profitability can be sustained stably.'"