SKHYV

Found many newbies asking questions in the comments 😂, let's briefly talk about SK Hynix's ADR here.

The US-listed SK Hynix is like a clone of the Korean-listed SK Hynix. The ADR raised $26.5 billion, accounting for only 2.5% of the Korean stock's trillion-dollar total market cap. Do you expect the 2.5% size of the US stock to move the 97.5% behemoth of the Korean market?

So even if US Hynix goes crazy today, it won't have much impact on the Korean main stock. Assuming market sentiment is bad next Monday, it's possible the Korean stock could fall instead of rise, and foreign capital selling Korea to buy the US is also negative.

Secondly, it has little impact on $Roundhill Memory ETF(DRAM.US) and $XL2CSOPHYNIX(07709.HK). Let alone that Hynix is only one of the top ten holdings of DRAM, it went up but other holdings are falling, and both DRAM and the Hong Kong 2x ETF track the Korean Hynix, not the US ADR.

Furthermore, today is the first day of SK Hynix's US listing, and it surged over ten points due to excited market sentiment. This is actually "sentiment premium," not the real stock price. Starting next week, the US ADR will track the price fluctuations of the Korean Hynix and gradually synchronize (I guess listing on Friday night is also to avoid excessive impact on the Korean stock, leaving the weekend to digest sentiment).

However, since the US ADR only accounts for 2.5% ($25.6 billion) of the Korean Hynix's total market cap, and the conversion from Korean stock to ADR is one-way locked, the ADR share won't increase significantly until at least after 2028. Due to scarcity, high liquidity, and currency loss factors, the US Hynix will maintain a premium long-term.

Referencing TSMC's ADR, the US-listed TSMC has a long-term premium of 10-15% over the Taiwan stock. TSMC is a unique, weak-cycle monopoly enterprise, so its premium being higher than that of the strong-cycle, replaceable Hynix is normal. I think a long-term premium of around 5-10% for US Hynix is reasonable.

Today's Korean Hynix closing price, after a 1-for-10 split converted to USD, is about $146.5. The US stock is currently $173. The extra is all premium, about 18%, making it hard to buy now.

The Korean Hynix's all-time high is $198. I plan to wait for a 35% pullback - minus 10% premium = a 25% pullback, around $150, before buying. Mainly because I've almost missed all the memory market trends in the past half year, missing another one isn't a pity. Even if I chase highs, I want a safety cushion. This is for reference only.

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