Yesterday SK Hynix (ADR) (hereafter SKHY) showed an enormous surge of +27% on the US market,
but today, right as the regular US market opened at 22:30 Korean time, it's been swinging between -8% and -4%.
It's been on a roller coaster for several days now, which seems like the market still finding the right price level since it's early in the listing.
As of when I'm writing this, the SKHY stock price is about $185, and converting it to compare with the Korean Hynix stock price: 181 x exchange rate 1,500 x ADR ratio 10 (ADR:Korean underlying share = 10:1) = about 2,775,000 won
Today's Korean Hynix closing price: 2,022,000 won
US-listed Hynix ADR : Korean underlying share = 2,775,000 : 2,022,000 = 1.37 : 1
In other words, with the US-market premium applied, the US ADR is 37% more expensive than the Korean underlying share.
(Yesterday when it spiked +27% on the US market, it was more than 50% more expensive than the Korean underlying share.)
So I think today might be more of a technical pullback from yesterday's spike.
Referencing analysis articles on the SK Hynix (ADR) premium, the expected range looks like this.
https://www.tradingkey.com/kr/analysis/stocks/more/262022895-sk-hynix-debuts-nasdaq-with-record-26-5b-offering-tradingkey
"For the initial SKHY (ADR) premium, Morgan Stanley expects 5-10%, though some suggest it could exceed 30%"
For reference, TSMC reportedly enjoyed a premium of around 10-30%, averaging 15-20%, after the AI rally (2024-2026), so I think it's fair to say SKHY is currently within that high-end range.
And investment firms like Barclays are projecting a target price of $330.
https://news.einfomax.co.kr/news/articleView.html?idxno=4425012
(Of course, some firms have lower estimates too.)
Even if today's US market closes lower than yesterday, I don't think there's any need to panic-sell Hynix shares on the Korean market tomorrow, since the valuation is still enjoying a much higher premium relative to the Korean underlying share, even if the US ADR closes red. (I really hope Hynix shareholders don't panic-sell.)
I'll feel pretty embarrassed if Korean-listed Hynix drops after saying all this, but with the fear index at record levels these days, I'm writing this hoping we don't end up in a vicious cycle where everyone gets spooked by the insane volatility and a red candle, panic-sells, and drives it down even further ㅎㅎ;
See you at noon. Taking the advice to heart, in this kind of abnormal volatility, I think it's best to not get too emotional about every swing and just hold steady.
(Unless you already cut your losses early in the downturn)
"Don't panic, and if you just hold on, that's the end of it"
p.s. Micron and SanDisk seem to be dropping alongside SKHY, so before the Korean pre-market opens tomorrow, I'd suggest checking those stocks' closing prices and overnight futures movement before making a decision.
My hope is that even just one more person doesn't panic-sell, but if it assumes even the overnight futures crash further, that might just be wishful thinking on my part;;
For now, I'd suggest focusing mainly on the valuation comparison above ㅎㅎ;
