SK hynix American depositary receipts (ADR) listed on the U.S. stock market climbed close to $200, and SK hynix(000660) the gap with the underlying shares is steadily widening. On the 40s in recent days.
In particular, as next-generation AI models are unveiled, U.S. memory chip stocks are rallying again, but Korea's market is not fully reflecting the warmth.
On the 9th (local time), SK hynix ADR closed at $198.63, up 7.05% ($13.08) from the previous session. This is the first time it has topped $190 since closing at $193.92 on July 14. It is also the highest close since its July 10 listing.
As the rally in SK hynix ADR accelerates, the gap with SK hynix's underlying shares is creeping wider again.
As of the 9th, the gap between the ADR and the underlying shares stands at 43.32%. Reflecting the exchange ratio between the ADR and the common shares (10 to 1) and converting to won, that equals about 2.66 million won per common share. That is more than an 800,000-won gap with the SK hynix underlying share price.
Previously, the ADR-underlying gap narrowed after hitting 51.15% on July 15 as memory chip stocks corrected in both the United States and Korea. The ADR, which reached $193 on July 14, fell to $126 on July 29. It then moved sideways in the $150 to $160 range through August.
The ADR-underlying gap also rose gradually from 19.13% on July 31 to 34.52% on Aug. 31 and recently to 43.32%. In particular, as the won-dollar exchange rate fell to the 1,330-won level lately, that seems to have curbed the widening. If the rate had stayed high in the 1,500-won range, the won-converted price would have jumped and the gap likely would have widened further.
Stock market analysts cite OpenAI's recently released next-generation AI model Astra as a key reason for the widening gap. With the overwhelming performance of the new AI model proven, expectations have grown for a resumption of AI investment and stronger memory chip demand, centered on the U.S. market. In fact, New York stocks closed lower overnight on a surge in global oil prices, but memory chip stocks instead showed strength.
By contrast, memory chip stocks in Korea such as SK hynix and Samsung Electronics are not staging a strong rebound. This is attributed to tangled flows of funds from investors who bought during the sharp rally in June.
Kim Su-hyun, head of the center at DS Investment & Securities, said, "When ChatGPT launched in the past, there was a case where TSMC ADR surged first and the underlying shares followed with a time lag," adding, "Typically about three-quarters of the ADR's gain is reflected in the underlying shares."
Researcher Kim Jae-seung at Hyundai Motor Securities said, "In the U.S. stock market, investor sentiment toward memory chips is gradually recovering, but in the domestic market, many individual investors who entered when the KOSPI index was at 7,000 to 8,500 points are sitting on losses, so overall sentiment is poor."
However, some say that if the gap widens over the long term, inflows into the underlying shares could be expected. Kim said, "Passive U.S. funds that cannot access SK hynix's underlying shares tend to flow into the ADR," adding, "If the gap widens and the perception grows that the underlying shares are relatively cheap, overseas long-money funds could flow into the underlying shares."