SK Hynix’s Nasdaq first day 12.76% surge, why did the common stock 10% or more
SK Hynix’s American depositary shares (ADSs) 7on 10the first day of Nasdaq listing on 12.76% higher at 168.01dollars, but 7on 13the domestic common stock fell by the 10range on foreign selling and profit-taking, among other factors. A price gap between the ADSs and the common stock was confirmed.
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SK Hynix listed on Nasdaq on 7the 10American depositary shares (ADSs, certificates designed to make it easier for local investors to buy and sell foreign stocks) closed on the first day 12.76% higher at 168.01dollars. That alone makes it look like things went well, but the Korean common stock went in the opposite direction. Ignoring this price gap could lead to short-term losses.
When converted, something strange happens. The ADS 1share price to Korean common stock 1shares 10of 1is disclosed. Converting the Nasdaq closing price into won per common share gives about 1ten thousand 253won. The domestic common stock closed at 2,000ten thousand won on the same day. Even though it is the same company’s stock, it was trading more expensively on Nasdaq.218,
| Category | Price |
|---|---|
| ADS converted price (per common share) | 1ten thousand 253won |
| Domestic common stock closing price | 2,000ten thousand won |
| Difference | about 218ten thousand won (35%) |
The next point is why the gap emerged.
If you translate the tangled price in the U.S. market into market capitalization, the picture gets even bigger. The ADS closing market cap was reported at about 1 trillion 2,000billion dollars. The U.S. memory company mentioned as the comparison stood at 1 trillion 1,000billion dollars, so Hynix was treated as the larger company.
The problem 3was exposed days later. During morning trading on 7the 13domestic common stock fell by 10.55% to 195won. The drop was driven by foreign selling and a wave of profit-taking orders at once. Overseas, a report also said a strategy of "buy ADS, borrow the common shares and sell them" was circulating. It is a trade that sells the cheaper side and buys the more expensive side to pocket the spread. On top of that, anxiety in the domestic stock market added to the pressure.
At one point during trading, the ADS also surged to 177dollars. That means the opening-day enthusiasm was intense. But that enthusiasm turned into a headwind for the domestic common shares. The standard used above compiles trading facts such as company disclosures, transaction prices, converted figures, and intraday moves.
Sources: 파이낸셜뉴스 증권
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