As shares of SK hynix (000660.KS) climb on the back of expanding demand for high-bandwidth memory (HBM) and expectations of a U.S. American Depositary Receipt (ADR) listing, the benefits are rapidly spreading to its largest shareholder, SK Square. In the exchange-traded fund (ETF) market, investor money is also flowing sharply into products that hold the two stocks at high weightings. However, as SK hynix overtook Samsung Electronics (005930.KS) in market capitalization, caution that this signals overheating is growing.
According to the Korea Exchange on Tuesday, SK hynix, which has risen to the position of "top stock," accounted for 27.93% of the market capitalization on the securities market, edging out Samsung Electronics (27.74%) by 0.19 percentage points. As recently as the start of the year, Samsung Electronics held a 21.37% share of market capitalization, while SK hynix stood at 13.85%. This year, Samsung Electronics shares have risen 194.83%, while SK hynix surged 348.39%, rapidly narrowing the market cap gap.
The securities industry views the backdrop of SK hynix's pronounced strength as a reflection of the changing structure of the semiconductor industry in the artificial intelligence (AI) era. While Samsung Electronics holds a diverse business portfolio spanning mobile, foundry, and home appliances, SK hynix has a high concentration in memory chips, so the analysis is that the benefits of the "super cycle" are being reflected more directly. Song Myung-sub, a researcher at iM Securities, forecast, "The memory chip business is judged to continue its boom at least until 2027," adding, "Big tech companies are continuing data center investment through rights offerings and joint ventures (JVs) despite funding shortages, so AI memory demand will also maintain its strong flow."
Beyond its own fundamentals, analysis is also emerging that investor sentiment is strengthening further amid expanding access for overseas investors and expectations of enhanced shareholder value. Lee Jong-hyung, head of the research center at Kiwoom Securities, said, "Recently, with ADR listing expectations and large-scale shareholder return expectations becoming intertwined, a concentration of supply and demand is occurring toward SK hynix."
SK Square, the largest shareholder holding approximately 20% of SK hynix, is also showing accompanying strength. In fact, SK Square has recently posted gains for eight consecutive trading days alongside SK hynix, recording a return of 66.53% over that period, overwhelming SK hynix (42.53%). NH Investment & Securities sharply raised its target price for SK Square from 1.1 million won to 2.7 million won, reflecting the rise in the value of its SK hynix stake and the group's semiconductor-centered growth strategy.
The benefits to the two stocks have also spread to the ETF market. On a portfolio basis (excluding leverage) as of Tuesday, the ETF with the highest exposure to SK hynix and SK Square was "KODEX AI Semiconductor TOP2 Plus," with the combined weighting of the two stocks reaching 50.61%. In addition, "HANARO Fn K-Semiconductor (49.65%)," "TIGER 200 IT (46.39%)," and "SOL AI Semiconductor TOP2 Plus (44.44%)" have also established the two stocks as core assets that determine fund performance.
Along with high returns, capital inflows have also increased rapidly. "SOL AI Semiconductor TOP2 Plus," which rose 40.4% over the past month, saw a net inflow of 2.5863 trillion won, drawing the most money among domestic ETFs. Over the same period, "TIGER 200 IT (32.7%, 670.9 billion won)," "KODEX AI Semiconductor TOP2 Plus (41.3%, 308.1 billion won)," and "HANARO Fn K-Semiconductor (37.3%, 216.1 billion won)" also attracted large sums of money on the back of high performance. As SK hynix and SK Square shares approach breaking through 3 million won and 2 million won respectively, the rising cost burden of investing in individual stocks is interpreted as having played a role. An asset management industry official explained, "Demand to maximize the semiconductor weighting within investment assets is surging not only in the industry but also among investors," adding, "ETFs, which allow investors to hold both stocks at the same time with a relatively small amount, have emerged as an alternative."
Voices of concern are also emerging that SK hynix's overtaking of Samsung Electronics in market capitalization should be approached with caution. According to Hana Securities, Samsung Electronics' second-quarter operating profit and net profit are forecast at 87.7 trillion won and 62.9 trillion won, respectively, increases of 1,776% and 583% from a year earlier. Over the same period, SK hynix's operating profit and net profit are expected to rise 1,363% and 618% to 72.2 trillion won and 50.3 trillion won, respectively. The point is that with Samsung Electronics exceeding SK hynix in both profit scale and growth rate forecasts, the change in the top stock position may be a result reflecting excessive expectations. Lee Jae-man, head of the global investment analysis office at Hana Securities, noted, "The situation where SK hynix is more expensive than Samsung Electronics in terms of valuation is one of the short-term overheating signals that can occur in a bull market," adding, "For KOSPI's further rally going forward, Samsung Electronics' share price must rise faster than SK hynix."
