A new era for SK Hynix has begun, allowing overseas investors to buy and sell the company's shares in dollars on the U.S. market without going through the Korean Exchange. This move is expected to broaden the global investment base for Korean companies.
On July 12, SK Hynix made a successful debut on the Nasdaq with its American Depositary Receipts (ADR), rising 13.08% on its first day of trading.
Market analysts believe that the ADR listing will significantly lower entry barriers for foreign investors. U.S. investors can now trade SK Hynix shares in dollars without needing to open a Korean brokerage account, enhancing accessibility for global investors. Richard Claude, a portfolio manager at Janus Henderson, stated in an interview with Reuters, "This ADR listing opens the door for global investors, including those in the U.S., to easily invest in one of the world's leading HBM companies, which was previously difficult to do directly in Korean stocks."
While some speculate that a portion of foreign trading may shift to the U.S. market, prevailing analysis suggests that the impact will be limited. Since ADRs are issued based on domestic listed stocks, the issuance and cancellation process involves trading of the underlying shares. If price discrepancies arise between the ADR and the underlying shares, arbitrage opportunities will likely lead to price convergence, making complete separation of the two markets unlikely. Additionally, passive funds tracking global indices like MSCI continue to include domestic shares in their portfolios, indicating that the foreign investment structure is unlikely to change dramatically in the short term.
Market observers are more focused on the potential for SK Hynix's corporate value to be reassessed, similar to the case of TSMC. As the base of global investors expands, there is hope for a virtuous cycle where both the U.S. ADR and domestic shares are reassessed together. Dongwon Kim, a researcher at KB Securities, noted, "Based on the expanded base of global investors, TSMC's ADR formed a premium over its underlying shares, leading to ongoing demand for conversion and arbitrage opportunities between the two. This has strengthened the virtuous cycle of reassessment for both the U.S. ADR and Taiwanese shares."
Reflecting these expectations, securities firms have been raising their target prices for SK Hynix. Among eight firms that published corporate analysis reports on SK Hynix this month, six have increased their target prices, now set between 3.8 million and 4.2 million won.
* This article has been translated by AI.
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