SK Hynix’s American Depositary Receipts (ADRs) are set to debut on the Nasdaq market on Friday. Investors should exercise caution as trading will occur under the temporary ticker SKHYV for one day before the official ticker is implemented.
On Thursday, Meritz Securities issued a client advisory detailing the upcoming Nasdaq listing of SK Hynix ADRs and outlining key investment considerations.
The notice stated that SK Hynix ADRs will list on the Nasdaq on Friday under the temporary ticker SKHYV. The initial reference price is set at 158.14 USD per share, with the exact trading start time yet to be determined. The ADR structure is such that 10 ADRs represent one ordinary share in the South Korean market.
Nasdaq follows a specific protocol for new listings, collecting orders and verifying prices for a period after the regular market opens before initiating trading. Consequently, even after the U.S. market opens, immediate trading may not occur. Investors are advised to monitor order and price screens to confirm actual trading availability.
The temporary ticker SKHYV will be in use for just one day, transitioning to the official ticker SKHY on July 13. Meritz Securities has indicated that U.S. weekly trading services for the SKHYV stock will not be available on July 13.
Investors should be aware of unique trading regulations for newly listed stocks. Only limit orders will be accepted until the initial trading price is established, with market orders not permitted.
Orders placed before trading commences will undergo order aggregation and risk management procedures by the exchange and foreign brokers. Excessively high buy orders relative to the reference price or expected trading price may face rejection, hold, or cancellation. If the U.S. exchange’s price stabilization mechanism (LULD) is activated, trading could be temporarily suspended or delayed.
Meritz Securities emphasized that newly listed stocks often experience significant price volatility. They urged investors to thoroughly research stock information and understand investment risks before committing capital.
In related news, Bloomberg reported on Wednesday that the demand for SK Hynix ADRs during the book-building process exceeded the offering amount by more than seven times.
Labor Gil, an analyst at Shinhan Investment Corp, noted that it secured orders surpassing the offering amount during book-building, with confirmed participation from major global institutions. He added that it’s highly probable that SK Hynix ADRs will initially trade above the domestic equivalent price.
Gil further explained that whether the U.S. market prices will influence the domestic stock or remain isolated to the U.S. market will be crucial for domestic investors’ returns. He stressed the importance of continuously monitoring the price relationship between both markets following the ADR listing.
Gil concluded that if the ADR premium expands while SK Hynix’s stock price rebounds and short interest decreases, it might consider increasing the position. Conversely, if the domestic stock continues to underperform while short interest and futures open interest rise, it may need to reassess the weighting within the semiconductor sector.