[E-Daily Reporter Kwon Oh Seok ] The price gap between the domestic shares of SK hynix(000660), a leading domestic semiconductor stock, and its American Depositary Receipts (ADRs) is widening to a record high. As investors, weary of the extreme volatility and supply-demand instability in the domestic stock market, turn to the relatively stable U.S. market, the unusual phenomenon of stock prices varying significantly depending on the listing market—even for the same company—appears to be intensifying.

According to MP Doctor on the 18th, SK hynix’s stock price closed at 1,697,000 won on the 14th, down 6.35% (115,000 won) from the previous trading day. In contrast, SK hynix ADRs listed on the New York Stock Exchange closed at $190.07, up 0.94% from the previous session. When converted to won using the ADR-to-common-stock exchange ratio (10:1) and the exchange rate, the ADR price amounts to approximately 2,558,200 won. This means the price discrepancy between the two markets has widened to a staggering 50.7%.
Since its listing, SK hynix ADRs have consistently traded at a premium of around 35% relative to the underlying stock. However, this spread has been widening each month, rising from an average of 32.5% in July to 35.4% in August and 38.7% in September. Although the recent decline in the won-dollar exchange rate created room for the converted price to fall, the price discrepancy actually widened. This is because strong buying pressure emerged, driven by the affordability of ADRs—which trade at about one-tenth the price of domestic shares—and the stability of the U.S. market, despite the higher tax burden associated with ADRs.
In fact, according to the Korea Securities Depository, domestic investors have made net purchases of approximately $713.85 million (about 960 billion won) worth of SK hynix ADRs from the time of their listing through mid-month. In contrast, on the KOSPI market, retail investors sold a net 5.9675 trillion won, while foreign and institutional investors sold a net 8.6822 trillion won and 3.9690 trillion won, respectively, flooding the market with shares. This has even led to the emergence of a dedicated blog that calculates the price discrepancy daily.
Experts cite declining investor confidence in the Korean stock market as the root cause of this widening divergence. Lee Chang-dae, CEO of Jangin Investment Club, recently appeared on the “Bu-il-nam” YouTube channel and said, “It seems this situation has arisen because there is a huge difference in confidence between the U.S. and Korean markets,” but added, “This divergence cannot last long. Eventually, the Korean domestic shares will rise, and the gap will narrow again.”

Professor Lee Jun-seo of Dongguk University explained, “Fundamentally, there is bound to be a difference in valuations between the Korean and U.S. stock markets,” adding, “The existence of a conversion ratio structure between the underlying stock and ADRs also appears to be a contributing factor.”
In fact, in the domestic market, every time the stock price rebounds, a flood of profit-taking and stop-loss orders from investors who bought at the peak is hampering the recovery. In contrast, the U.S. market is being supported by global momentum.
The securities industry considers it highly likely that SK hynix ADRs will be included in the Philadelphia Semiconductor Index next year. If included in the index, massive inflows of passive funds could lead to a revaluation of the company’s market value.
A securities industry official predicted, “Ultimately, the domestic shares and ADRs will converge in the same direction,” adding, “Once the negative supply-demand imbalance in the domestic stock market eases and the market stabilizes, the domestic shares could rise sharply within a few months, narrowing the price gap with the ADRs.”