South Korean retail investors have been pouring money into SK Hynix American depositary receipts listed on Nasdaq, creating a sharp premium over the company’s locally traded shares, according to data from Korea Securities Depository and Settlement institutions cited by Odaily. From July 10, when the ADR began trading on Nasdaq, through Aug. 19, South Korean investors were net buyers of about $835 million worth of SK Hynix ADRs, or roughly KRW 1.16 trillion. That made the stock the second-most purchased U.S. equity among South Korean investors during the period and accounted for 16.4% of their total net buying in U.S. stocks. The buying spree has widened the gap between the ADR and the Seoul-listed common stock. On Aug. 19, SK Hynix shares in South Korea fell 9.75% to close at KRW 1.5 million, while the ADR rose 0.35% in the U.S. market to $156.16. Because one SK Hynix ADR represents 0.1 of a South Korean common share, the implied common-share value should be about 10 times the ADR price. As of Aug. 19, however, the local share price stood at only 6.82 times the ADR-implied value, leaving the ADR at an estimated 46.67% premium to the domestic stock.
South Korean retail investors are aggressively buying SK Hynix American depositary receipts, or ADRs, listed on the Nasdaq, pushing the instrument to a steep premium over the chipmaker’s locally traded shares, according to securities depository and settlement data cited by Odaily.
From July 10, when the SK Hynix ADR started trading on Nasdaq, through Aug. 19, South Korean investors were net buyers of about $835 million, equivalent to roughly KRW 1.16 trillion. During the same period, the stock ranked second among all U.S. shares purchased by South Korean investors and accounted for 16.4% of their total net purchases of U.S. equities.
The gap with domestic shares keeps widening
The sustained inflow has widened the price gap between the ADR and SK Hynix’s South Korean common shares. On Aug. 19, the company’s local stock fell 9.75% to close at KRW 1.5 million. In the U.S. market, the ADR rose 0.35% to finish at $156.16.
Under the conversion structure, one SK Hynix ADR represents 0.1 of a South Korean common share, which means the theoretical common-share value should be about 10 times the ADR price. As of Aug. 19, however, the South Korean stock was trading at only 6.82 times the ADR-implied value, indicating that the ADR carried a premium of about 46.67% over the local shares.
The original source cited in the brief was NATE.
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