Last Wednesday, Hynix announced the Nasdaq ADR listing. The next day, the stock price rose by almost 3 million won.
The market sentiment was until July 10th, the listing start date,
1) Expectation of Samsung Electronics' surprise earnings announcement (tentative)
2) ADR offering price (tentative) 2.55 million won/10 = 255,000 won = lower support line
3) If Micron starts matching after the listing, it is expected that chronic undervaluation will be resolved to some extent. This is expected to be reflected in advance, and an upward trend is expected until the listing date.
It was.
However, as of today, the stock price has fallen by more than 25% from its high.
What is the reason? I looked into ADR related matters, and the fact that the ADR schedule is set up is not good news for individual investors like us. The biggest reason is the overseas institutional investors who participate in this offering.
They,
1) Need to protect confirmed profits and eliminate downside risk regardless of whether the ADR price rises or falls after the offering.
2) Institutional investors who participated in demand forecasting are allocated at a 3~5% discount from the determined offering price (confirmed profit).
3) The lower the main stock price, the more profitable it is (securing more shares with the same budget = short covering + alpha quantity)
In other words, even if the margin for shorts decreases or losses increase due to a surge after the listing, they can offset this with the ADR allocation.
I don't understand it 100%, but I guess it sounds natural to delta hedging experts.
It's a foreign language to most ordinary people.
Anyway, yesterday's Metaball noise gave them a good excuse.
+ News of Samsung Nix's large-scale investment in the future is also bad news for them.
So, are we saying that we will die until the listing date... No, that's not it.
1) There is no adversity that overcomes performance.
2) Even if ADR rises, there is no need to worry that the main stock price will not rise together. If the difference widens, the market will mechanically perform arbitrage.
3) With today's plunge, short margins have become sufficiently large, so there is a high probability that a large-scale covering volume will come in before the listing date, and if domestic institutions don't just do nothing, there is a high possibility of a sharp rebound.
Personally, I hope that Samsung Electronics' tentative earnings announcement scheduled for July 7th will be advanced by just one day (+ it would be nice to carry over the bonus payment to the next quarter).
