SK hynix Inc. (KRX:000660; NASDAQ:SKHY) experienced a dramatic divergence between its Seoul and New York listings on Friday, as the common shares soared 29.95% while the ADR declined 3.54%. The sharp move in Seoul has brought the implied premium of the ADR over the common shares down to approximately 20.7%, a significant compression from the 60.5% premium observed just a day earlier.
The Seoul-listed shares closed at 1,718,000 won on Friday, but that surge was not enough to offset earlier losses, leaving the stock down 2.3% for the week. The ADR closed at $143.73, while the implied parity per ADR—calculated by dividing the Seoul close by the won-dollar exchange rate and adjusting for the 10:1 ADR ratio—stood at $119.06. The narrowing premium reflects the differing trading hours and investor sentiment across the two markets.
The weekly performance reveals a volatile five sessions. After closing at 1,816,000 won on July 27, the stock fell sharply on July 28 (-14.65%), July 29 (-9.61%), and July 30 (-5.64%), before Friday's 29.95% rebound. The Kospi index also posted its largest single-day gain on record, rising 17.9%, with Samsung Electronics (KRX:005930) jumping 26.81%.
Fundamentals, however, showed less volatility than the market moves. SK hynix reported preliminary second-quarter revenue of 79.3 trillion won and operating profit of 60.5 trillion won, both missing LSEG consensus estimates by about 5.5%. The shortfall was attributed to delayed HBM4 deliveries, which pushed some revenue recognition into later quarters. Net income came in at 93.9 trillion won, boosted by investment returns of 63.3 trillion won.
Despite the earnings miss, demand guidance remained upbeat. President Song Hyun-jong stated that major customers are still requesting more memory supply, and the company has signed nearly 10 long-term contracts, typically spanning five years. These agreements provide volume visibility but may limit short-term pricing flexibility. SK hynix expects capital expenditure to rise to the high-40-trillion-won range, up from 30.2 trillion won last year.
The valuation gap between the Seoul listing and the ADR is notable. The common shares trade at a quoted P/E of 16.26, while the ADR's P/E is 19.57, closer to Micron Technology's (NASDAQ:MU) 18.63. This discrepancy is largely due to listing mechanics rather than operational differences.
Looking ahead, markets face two key tests. On Monday, CSOP will launch a flexible leverage structure for products tied to SK hynix, potentially amplifying moves. On Tuesday, Advanced Micro Devices (NASDAQ:AMD) will report earnings, providing insights into AI accelerator spending trends.
Risks remain, including potential pricing pressure from HBM4 delays, reduced AI expenditure, added supply, and progress by Chinese chipmakers. The slimmer ADR premium could support Seoul shares in the absence of new earnings catalysts, but if the spread widens again, the recovery may be threatened.
