SK Hynix Raises 40 Trillion Won via ADR: What It Means for the Korean Stock Market

[Anchor]

SK Hynix is entering the U.S. Nasdaq market tonight, July 10.

With the company set to raise approximately 40 trillion won, we will look into what this U.S. market entry signifies and what the American Depositary Receipt (ADR) method entails. Reporter Min Gyeongho explains.

[Reporter]

Simply put, this allows U.S. investors, who previously had to purchase SK Hynix shares directly in Korean won, to trade the product within the U.S. market.

However, they are not trading the actual SK Hynix shares directly.

The company issued 17.79 million new shares, representing about 2.5% of its total outstanding shares, and deposited them with Citibank in the U.S. The shares traded are the receipts issued by Citibank.

These receipts are called Depositary Receipts (DR), and those issued in the U.S. are specifically known as ADRs.

Given the high price of SK Hynix shares, the company split the value by 10 to lower the price and ensure sufficient liquidity.

The price per receipt was set at 149 dollars.

Buying one ADR in the U.S. is equivalent to purchasing 0.1 shares of the actual SK Hynix stock.

Yesterday, July 9, SK Hynix closed at 2,186,000 won in the domestic market. Converting that to dollars and taking one-tenth of the value results in 144.5 dollars.

With the public offering price set at 149 dollars, there is a premium of about 3%.

SK Hynix stated that demand for the offering was seven times the available volume, marking the first time in U.S. stock market history that a common stock offering has carried such a premium.

As the company is recognized for its value as a global memory chipmaker, the total amount raised through this listing is 26.507 billion dollars, or approximately 40 trillion won in Korean currency.

This is the largest public offering by a foreign company listed on the U.S. stock market to date, and the third-largest in the global public offering market, following space company SpaceX and the Saudi Arabian state-owned oil company Aramco.

SK Hynix plans to use the funds raised to build semiconductor plants and install equipment in locations such as Yongin and Cheongju.

(Video reporting: Kang Dong-cheol, Video editing: So Ji-hye)

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[Anchor]

As this is the largest U.S. listing in the history of a Korean company, it is expected to have a significant impact on our market.

We will discuss this further with reporter Min Gyeongho from the Economic Department.

Q. Will the U.S. market premium for SK Hynix continue?

[Min Gyeongho: It seems quite possible, especially in the early stages of the listing. Above all, since SK Hynix, which had been undervalued compared to its competitor Micron, is now listed on the same market, there are predictions that it will command a premium over its domestic market price. In particular, if arbitrage trading—buying in Korea and selling in the U.S.—becomes possible, this gap should naturally disappear. However, there is a possibility that regulations may be implemented to address side effects like volatility. In the case of TSMC, a Taiwanese semiconductor company that also listed via ADR in the U.S., the stock trades at a premium of over 15% compared to its Taiwan price, and it is also subject to strict regulations.]

Q. Will the SK Hynix stock price in the Korean market rise?

[Min Gyeongho: With a positive outlook for semiconductors, it is positive in the sense that a high price for SK Hynix in the U.S. market could stimulate domestic investor sentiment. However, we must be cautious about the fact that it could become more susceptible to the logic of the U.S. AI market. If concerns about a semiconductor peak-out are raised strongly in the U.S. market, we could see a larger decline in the Korean market than expected. Today, SK Hynix stock fluctuated before closing slightly lower, which can be interpreted as a reflection of these complex, conflicting outlooks.]

Q. What is the impact on the overall Korean stock market?

[Min Gyeongho: One of the biggest causes of recent volatility in the domestic stock market has been the excessive concentration of capital in Samsung Electronics and SK Hynix. With this listing, at least some foreign investment in SK Hynix will likely be diverted to the U.S. market. There are predictions that this will contribute to easing volatility in the domestic market. Furthermore, as the dollars raised through the listing are supplied domestically, there are expectations for the stabilization of the won-dollar exchange rate. Today, the won-dollar exchange rate fell below 1,500 won during intraday trading, and the stock market saw a broad rally across various sectors, with the KOSPI rising 2.5% and the KOSDAQ climbing over 5%.]
※ Please note: This article was translated by AI and may contain errors.