SEOUL – SK Hynix sank in Seoul on July 13 after the memory chip giant’s highly anticipated US trading debut.
The stock fell as much as 10 per cent on Korea Exchange, weighing on the benchmark Kospi which fell 5.6 per cent. It was down 9 per cent at 11.25am local time.
That came after SK Hynix’s American depositary receipts (ADRs) climbed 13 per cent on July 10, on follow-on demand following the second-largest share sale in history.
The New York momentum is already priced in and the stock may face heavy intraday profit-taking and arbitrage unwinding, said Jason Minsang Kam, head of active equity management at Kyobo Life Insurance Co. in Seoul.
The company’s US$26.5 billion (S$34 billion) US offering was closely watched as a test of demand for overseas offerings as well as for the longevity of the artificial intelligence rally. SK Hynix has gained attention among global investors for its key position as a supplier of high-bandwidth memory to work with Nvidia’s AI processors.
Even amid recent concerns over stretched AI valuations and high spending levels, the deal was more than seven times oversubscribed, Bloomberg News reported. The US listing closed on July 10 at a premium of roughly 15 per cent to the Seoul-listed shares, Bloomberg-compiled data shows.
The company’s South Korean shares have skyrocketted more than 25-fold since the end of 2022 as the AI boom has driven up prices of all kinds of memory chips, driving record profits. The stock’s ascent has gotten a push from a retail frenzy and surge in leverage that has made it susceptible to wild swings.
Expectations have reached levels that are getting harder to beat. A report from Korea Investment & Securities on July 13 projects SK Hynix’s operating profit for the latest quarter may trail consensus by 8 per cent due to the company’s large share of revenue from HBM, where prices are rising more slowly than for conventional chips. BLOOMBERG
