[E-Daily Reporter KIM YOON-JEONG ] As SK hynix’s American Depositary Shares (ADS), ticker symbol “SKHY,” began trading on the Nasdaq on the 10th (local time), domestic investors’ attention is focused on whether “if the shares trade at a premium in the U.S., will the domestic shares also rise.” The securities industry believes there is a high likelihood that a premium will form in the U.S. market during the initial listing period, but analysts note that the key variable is the extent to which that price premium will be passed on to the domestic shares.

According to industry sources on the 9th, SK hynix(000660)is issuing 177.9 million American Depositary Shares (ADSs), designated as “SKHY,” based on 17.79 million new shares. Ten ADSs are equivalent to one domestic common share, and the public offering size is approximately $28 billion (about 43 trillion won). Shinhan Investment Securities noted that orders exceeding the offering volume were received during the bookbuilding process and that participation from major global institutional investors was confirmed, forecasting that SKHY is likely to trade at a level higher than the domestic underlying stock price during the initial listing period.
However, analysts note that it is difficult to conclude with certainty that the premium formed in the U.S. will immediately lead to a rise in the price of the domestic underlying shares. Noh Dong-gil, an analyst at Shinhan Investment Securities, explained, “Whether the high price formed in the U.S. is passed on to the Korean underlying shares or remains in the U.S. market will determine the gains or losses for domestic investors,” adding, “The key to this IPO is not the first-day gain itself, but rather confirming the price relationship between the ADS and the underlying shares.”
◇ TSMC Trades at a Premium in the U.S. Due to ‘Conversion Restrictions’… Will SK hynix Follow Suit?
Shinhan Investment Securities cited TSMC as a prime example. TSMC ADSs have long traded at a premium to the Taiwanese common stock in the U.S. market. The average premium was 3.2% from 2010 to 2019, but it widened to 7.4% from 2020 to 2023 and has risen to an average of 19.1% since 2024. It has maintained an average level of 17.5% so far this year as well.
The report analyzed that this premium is the result of strong demand from U.S. investors combined with constraints on ADS supply. It explained that even if U.S. demand is strong, if there are constraints in the process of converting underlying shares into ADSs for supply, the price difference cannot be quickly resolved through arbitrage alone, allowing the premium to persist.
The conversion structure was also cited as a factor explaining the price difference. While TSMC can cancel ADSs to redeem the underlying shares in Taiwan (U.S. → Taiwan), the reverse process—depositing the underlying shares in Taiwan to issue new ADSs (Taiwan → U.S.)—is subject to approval quotas and regulatory constraints. Consequently, even if the ADS price rises in the U.S. market, it is difficult to conduct unlimited arbitrage by purchasing Taiwan-listed shares to issue new ADSs; during periods of high U.S. demand, the supply of ADSs could not increase sufficiently, allowing the price premium to persist.
Shinhan Investment Securities analyzed that while SK hynix does not have a fully convertible structure between its domestic shares and ADSs, it is difficult to confirm strong supply constraints on the level of TSMC based solely on publicly available information. Accordingly, the firm viewed the elasticity of the volume converted from domestic shares to ADSs as a key variable that will determine how much of the premium formed in the U.S. market will be passed on to the domestic shares.
◇“ADS Impact Largely Reflected… Maintain Core Weighting”
Researcher Noh also noted that expectations and concerns regarding the ADS listing have already been largely reflected in the stock price. SK hynix recorded a relative return outperforming SamsungElectronics and Micron from late March—after its U.S. listing plans became concrete—through June 23; however, following the disclosure of the offering terms, the stock showed relative weakness as concerns over dilution and price segmentation were factored in. During the same period, short interest also increased by 31.4%. However, despite a further decline in the stock price during the recent book-building period, short interest and open interest in stock futures did not increase further.
Shinhan Investment Securities assessed that, since the uncertainty surrounding the ADS listing has already been largely factored into the stock price, it need not be viewed solely as an additional negative factor. The firm explained that the key variable going forward will be the extent to which the price formed in the U.S. market is reflected in the domestic underlying stock. Analyst Noh advised, “It is difficult to view ADS risk as a new negative factor that has not yet been factored in,” adding, “For domestic investors, maintaining a core weighting is the basic strategy.”
He continued, “If SK hynix’s domestic shares rebound and the short interest decreases while the SKHY premium widens, this can be viewed as a phase where price transmission and the unwinding of short and hedging positions occur simultaneously.” He added, “Conversely, if the domestic shares show further weakness and short interest increases again, this could be interpreted as a signal of expanding new short positions.”
He also noted that it is premature to expect a large influx of passive funds based solely on the listing of U.S. ADSs. This is because the actual supply-and-demand impact could vary depending on whether the stock is included in the SOX index and the Nasdaq 100, as well as the method of inclusion.
Researcher Noh explained, “Since the SOX requires trading history and liquidity criteria for new constituents, we need to confirm whether SK hynix will be included in the regular September review.” He added, “Similarly, for the Nasdaq 100, if SK hynix is classified as a non-core ADR, only the value of its U.S.-listed ADSs will be reflected in the market capitalization for inclusion. Therefore, estimating passive fund inflows based on SK hynix’s total market capitalization could result in a figure higher than the actual amount.”