SK Hynix's American depositary receipts (ADRs) fell sharply in New York trading on Wednesday, dropping 10.12% to $174.30, while the company's local shares in Seoul continued to rally, rising 5.70% to 2,022,000 won. The divergence reflects profit-taking after the ADR surged 27% the previous day and a broader weakness in memory semiconductor stocks.
ADR Premium Shrinks After Soaring
The sharp decline in SK Hynix's ADR narrowed the premium over the local shares, which had exceeded 50% the day before. The ADR and local shares trade in different markets and time zones, so short-term price gaps can widen significantly, but they typically converge as profit-taking and shifts in investor sentiment occur.
The recent volatility stems from the ADR's listing on the Nasdaq, which triggered a short-term rally. After setting the ADR offering price at $149, strong buying pushed the stock to $189 during intraday trading, creating a premium of over 50% relative to the local shares. Analysts had warned of overheating and the potential for profit-taking.
Memory Sector Weakness Adds Pressure
A broad decline in memory-related stocks also weighed on SK Hynix's ADR. On the same day, Micron Technology, SanDisk, and Western Digital all fell, according to NewsPim. SK Hynix's ADR listing had previously boosted investor sentiment both domestically and abroad, fueled by expectations of rising AI memory demand.
Market participants expect the premium between the ADR and local shares to continue fluctuating before stabilizing at a certain level. The price gap remains a key focus for investors watching the stock's dual-market dynamics.