SK hynix(000660) is falling more than 9% intraday amid deteriorating investment sentiment over the global semiconductor cycle and simultaneous selling by foreigners and institutions.
The previous day's weakness in U.S. semiconductor stocks, talk of duplicate listings of an SK hynix subsidiary on the Nasdaq, and delays in announcing shareholder-return measures are also seen adding to the decline.
As of 2:12 p.m. on the 6th, SK hynix was trading at 1,516,000 won, down 9.11% (152,000 won) from the previous session on the Korea Exchange. At the same time, Samsung Electronics(005930) was also trading down 5.89% at 231,500 won, moving lower in tandem.
The main backdrop for the plunge is cited as shrinking investment sentiment toward global semiconductor stocks sparked by the New York market.
Even though major storage device-related semiconductor companies such as SanDisk posted strong results in the U.S. market the previous day, they fell sharply in after-hours trading on worries about lofty expectations and the outlook for the business cycle. The fallout sent Asia semiconductor shares, including Japan's Kioxia, tumbling across the board, and the impact extended to Korea's leading memory semiconductor stocks.
Impatience and uncertainty in the market over shareholder-return policies also weighed on sentiment. SK hynix achieved record-high results in the second quarter, but has delayed disclosing concrete shareholder-return plans due to legal and procedural regulatory constraints related to the listing of American depository receipts (ADR).
Recently, as the disclosure restriction period ended, expectations grew for large-scale shareholder returns such as share buybacks and cancellations and increased dividends, but with a definitive announcement delayed, disappointment selling emerged, according to assessments.
Some also say that concerns about damage to the parent company's value (a holding company discount) from reported moves to pursue a Nasdaq duplicate listing (IPO) of the U.S. NAND flash subsidiary "Solidigm" are pressuring the stock.
On some online communities, posts expressing concern about SK hynix's share price decline continue, such as, "There was a report that Solidigm, the subsidiary of SK hynix's NAND business, is pursuing an IPO—should I get out of the Korean stock market?" and "If Solidigm does an IPO, is Samsung Electronics the only one that benefits?"
However, in the securities industry, it was noted that neither the Solidigm listing issue nor the delay in the shareholder-return announcement is the fundamental cause of the plunge. The reason, they said, is that large-cap semiconductor stocks, including Samsung Electronics, are all slumping together.
Lee Sang-heon, an analyst at iM Securities, said, "With Samsung Electronics falling nearly 6%, it is hard to attribute SK hynix's 9%-range drop to company-specific negatives such as Solidigm," adding, "The impact has been amplified by profit-taking after SK hynix's relatively sharp rise in the domestic market the previous day and by heightened volatility."
The analyst said, "As seen with overseas corporations such as SanDisk, this should be interpreted as a deleveraging (liability unwinding) process in which leverage positions concentrated in semiconductor stocks are being reduced, rather than focusing on the headline earnings figures themselves," adding, "With upward pressure on interest rates and lingering concerns about the sustainability of big techs' capital expenditure (CAPEX), a box-range volatility phase is more likely for the time being than a V-shaped rebound."