SK Hynix's American Depositary Receipts (ADR) launched on NASDAQ on the 10th, closing at $168.01 and trading 15.78% above the domestic share price, as South Korea's KOSPI index fell 7.57% for the week to close at 7475.94. The market decline was driven by profit-taking following rapid gains, concerns over artificial intelligence investment profitability, and volatility from single-stock leveraged products, according to market analysts. Samsung Electronics and SK Hynix dropped approximately 30% from their yearly highs during the week, with the KOSPI 12-month forward price-to-earnings ratio falling to the low 6x range on the 9th, below levels seen during the 2008 financial crisis.
KOSPI Falls 7.57% as Semiconductor Stocks Drop 30% from Highs
According to the Korea Exchange on the 13th, the KOSPI index closed at 7475.94 on the 10th, down 7.57% for the week. The index fell 4.91% and 5.35% on consecutive days starting from the 7th, when Samsung Electronics announced its largest-ever second-quarter earnings. On the 9th, the index dropped to 7063.76 during trading.
Semiconductor large-cap stocks showed significant declines. Samsung Electronics and SK Hynix fell to 267,500 won and 2,076,000 won respectively during the week. Compared to this year's highs, the decline rates reached 28.6% and 30.5% respectively. The KOSPI 12-month forward price-to-earnings ratio fell to the low 6x range as of the 9th, dropping below levels seen during the 2008 financial crisis.
Foreign investors net sold 4.1162 trillion won in the securities market last week. They sold 2.9006 trillion won of Samsung Electronics and 3.2259 trillion won of SK Hynix. The KOSPI 200 volatility index (VKOSPI) ranged between 80-90 points for an extended period. On the 10th, it fell more than 8% to close at 78.15 points, dropping below 80 points for the first time since the 18th of last month.
SK Hynix ADR Closes at $168.01 with 15.78% Premium Over Domestic Shares
SK Hynix began trading on NASDAQ on the 10th at $170 and closed at $168.01. This represents a level 12.76% higher than the offering price and 15.78% higher than the domestic share closing price. Considering that one American Depositary Share (ADS) corresponds to one-tenth of a domestic common share, a "reverse kimchi premium" has formed in the US market.
Seo Sang-young, managing director at Mirae Asset Securities, explained that "if real-time capital movement and arbitrage trading between ADR and domestic shares are limited due to settlement time differences, taxation, and regulations, waiting demand in the US market can lead to a premium."
ASML and TSMC Earnings Reports Scheduled This Week
Market attention is expected to shift to the US earnings season. Starting with JP Morgan and Goldman Sachs on the 14th, ASML will announce earnings on the 15th, followed by TSMC and Seagate on the 16th.
On the 14th, the US Consumer Price Index (CPI) will be released, followed by the Producer Price Index (PPI) on the 15th, and US retail sales and the Bank of Korea Monetary Policy Committee results on the 16th. Kang Jin-hyuk, researcher at Shinhan Investment & Securities, stated that "even though Samsung Electronics recorded an earnings surprise that greatly exceeded market expectations, selling pressure emerged due to peak-out controversy," adding that "the key is whether the market's doubts and fear about the sustainability of artificial intelligence (AI) investment can be calmed through confirmation of earnings announcements and guidance from US big tech and semiconductor supply chain companies."
FAQ
What caused the KOSPI to fall 7.57% last week?
The KOSPI index fell 7.57% to close at 7475.94 on the 10th due to profit-taking following rapid gains, concerns over AI investment profitability, and volatility from single-stock leveraged products. Samsung Electronics and SK Hynix dropped approximately 30% from their yearly highs during the week.
How did SK Hynix's ADR perform on its NASDAQ debut?
SK Hynix's ADR launched on NASDAQ on the 10th, starting at $170 and closing at $168.01. This closing price was 12.76% higher than the offering price and 15.78% higher than the domestic share closing price, creating a "reverse kimchi premium" in the US market.
What major earnings reports are scheduled this week?
JP Morgan and Goldman Sachs will report earnings on the 14th, ASML on the 15th, and TSMC and Seagate on the 16th. US economic indicators including the Consumer Price Index on the 14th, Producer Price Index on the 15th, and retail sales on the 16th are also scheduled.
