SK Hynix stocks fell 11.53% to 1,842,000 won on the 16th in the Korean market while its American Depositary Receipt (ADR) closed at $168.01 in the US, 12.75% above the $149 offering price, highlighting contrasting investor sentiment across the two markets. Korean financial regulators responded by suspending new single-stock leveraged ETF listings and raising the deposit requirement from 10 million won to 30 million won. The divergence emerged after 16 ETF products, including those based on Samsung Electronics and SK Hynix, launched on May 27 in Korea, concentrating investment demand in a limited number of large-cap stocks that represent 65% of the KOSPI 200 index weight.
SK Hynix Falls 11.53% in Korean Market
SK Hynix closed at 1,842,000 won on the 16th, down 240,000 won (11.53%) from the previous trading day, according to the Korea Exchange. The stock also fell 16.15% on the 13th, demonstrating extreme volatility in recent sessions.
SK Hynix ADR Closes 12.75% Above Offering Price in US
SK Hynix ADR opened at $170 on its first trading day in the US, above the $149 offering price, and reached $177 during the session before closing at $168.01. On the second trading day, the ADR fell 9.32% but remained above the offering price. The ADR structure consists of 10 shares equivalent to one ordinary share in Korea. SK Hynix raised $26.507 billion by offering 177.9 million ADR shares at $149 per share.
US Firms Launch Multiple SK Hynix ADR-Based Leveraged ETFs
Directxion launched the "Direxion Daily SK Hynix Bull 2X ETF," which tracks twice the daily return of SK Hynix ADR, on the 15th (local time), according to MarketWatch. Corgi, T-REX, GraniteShares, and Leveraged Shares also introduced related products following the ADR listing.
Korean Regulators Suspend New Single-Stock Leveraged ETF Listings
Financial regulators announced supplementary measures on the 16th at a market situation review meeting chaired by the Deputy Prime Minister for Economic Affairs. The measures include suspending new listings of single-stock leveraged, inverse, and covered call products until market stabilization, and prohibiting advertising and promotional events. The deposit requirement increased from 10 million won to 30 million won in cash. Liquidity provider (LP) deviation rate management obligations tightened from 3% to 2%. Investor education time extended from 2 hours to 3 hours.
Samsung Electronics and SK Hynix Account for 65% of KOSPI 200 Index Weight
Samsung Electronics and SK Hynix represent approximately 65% of the KOSPI 200 index weight and approach half of the MSCI KOREA ETF weight, according to Park Woo-yeol, a researcher at Shinhan Investment & Securities. In the US, NVIDIA accounted for only 2-3% of index weight when its leveraged products launched and currently represents 8%. The concentrated structure in Korea means volatility in individual stocks has a greater impact on overall market fluctuations.
16 ETF products, including those based on Samsung Electronics and SK Hynix, launched on May 27 in Korea. The Korean 2x leveraged SK Hynix ETF fell over 40% within one month of listing. In contrast, the CSOP SK Hynix 2x Leveraged ETF, which launched in Hong Kong in October last year, recorded a 270% return this year. Bloomberg columnist Shuli Ren wrote on the 15th that the Korean products launched when the market was overheated and approaching a peak, causing retail investors to miss most of the upside and bear the subsequent decline.
FAQ
What happened to SK Hynix stocks on the 16th in Korea and the US?
SK Hynix fell 11.53% to 1,842,000 won on the 16th in the Korean market. In the US, SK Hynix ADR closed at $168.01, which was 12.75% above the $149 offering price, despite falling 9.32% on the second trading day.
What measures did Korean regulators announce on the 16th?
Korean financial regulators suspended new listings of single-stock leveraged, inverse, and covered call products until market stabilization. The deposit requirement increased from 10 million won to 30 million won in cash. Liquidity provider deviation rate management obligations tightened from 3% to 2%, and investor education time extended from 2 hours to 3 hours.
How much of the KOSPI 200 index do Samsung Electronics and SK Hynix represent?
Samsung Electronics and SK Hynix account for approximately 65% of the KOSPI 200 index weight and approach half of the MSCI KOREA ETF weight, according to Park Woo-yeol, a researcher at Shinhan Investment & Securities.
