SK Hynix Plummets 15% Despite ADR Hopes: What Happened?

[Anchor]

The KOSPI was dragged down today (July 13) by major semiconductor stocks, particularly SK Hynix. Expectations were high after the company's American Depositary Receipts (ADR) surged 12% on their first day of trading on the Nasdaq last week, but the primary shares on the KOSPI plummeted by 15%. This marks the largest single-day drop in the company's history.

Reporter Kim Hye-min has the story.

[Reporter]

The 15.3% drop recorded by SK Hynix today is the largest decline ever.

In a single day, 238 trillion won in market capitalization evaporated.

There were high expectations that the positive momentum would carry over to the domestic stock price after SK Hynix ADRs, which listed on the U.S. Nasdaq on the 10th, closed more than 12% above their offering price. Instead, the stock saw a historic crash.

Analysts suggest that the decline was driven by selling as the anticipation surrounding the U.S. market entry faded, alongside foreign investors shifting their capital toward the more accessible U.S. ADRs.

However, as it is still the early stage of the listing and given external variables such as the escalating conflict in the Middle East, it appears too early to determine the full impact of the ADR.

[Interview: Lee Hyo-seob, Head of Financial Industry Research at Korea Capital Market Institute]
"The rise in ADRs does not seem to have a significant correlation with today's performance. If the price of the U.S. Hynix ADR shows a smaller decline or a rebound, we expect it to have a positive impact on the primary shares tomorrow."

Amid the uncertainty regarding the effects of the ADR listing, concerns over a peak in the semiconductor cycle have resurfaced, causing investor sentiment to freeze.

Korea Investment & Securities stated in a report that it projects SK Hynix's second-quarter operating profit to be in the 60 trillion won range, which is 8% lower than the market consensus of 65 trillion won.

Samsung Electronics, as well as Kioxia, Japan's top memory chip maker by market cap, also fell by more than 13%. Meanwhile, U.S.-based Micron and SK Hynix ADRs have also shown downward trends in the over-the-counter market.

Although sharp declines due to peak-cycle theories are becoming more frequent, the prevailing view in the securities industry remains that demand for memory chips will stay robust.

[Interview: Lee Jin-woo, Head of Research Center at Meritz Securities]
"Around early September, our domestic memory companies conduct demand surveys with their (foreign) clients. The rally actually began last year after we confirmed a massive surge in demand through those surveys. The same process is scheduled for this year."

With U.S. big tech companies such as Alphabet and Meta scheduled to announce their earnings later this month, starting with TSMC and semiconductor equipment maker ASML this week, significant market volatility is expected depending on the guidance provided by these firms.

(Reported by Lee Byung-joo and Shin Jin-soo | Video by So Ji-hye | Graphics by Kim Ye-ji)
※ Please note: This article was translated by AI and may contain errors.