SK hynix (000660.KS), preparing for its Nasdaq listing, is drawing intense interest from global investors. With subscriptions far exceeding the shares on offer ahead of pricing, expectations for a strong debut are rising, while the high volatility of the semiconductor sector has emerged as a last-minute variable.
According to Bloomberg on Friday, SK hynix's U.S. American depositary receipt (ADR) offering has received orders amounting to multiple times the shares on offer. Long-term-oriented global institutions and technology-focused investors participated actively from the outset, and about 1,000 institutional investors attended a management roadshow held the previous day.
SK hynix began the ADR offering process for its Nasdaq listing in earnest on Thursday. One ADR corresponds to one-tenth of a common share, and a total of 177.9 million ADRs will be issued. The offering represents about 2.5% of the company's total market capitalization.
The offering price will be set on the afternoon of Sunday in New York, and the ADRs are scheduled to begin trading on the Nasdaq Global Select Market on Monday. The offering is currently estimated at about $28 billion (approximately 43 trillion won). Although this is somewhat smaller than the $29 billion projected last month, if completed as planned, it is expected to be one of the largest U.S. listings by a foreign company.
Investment intentions from large institutions continue as well. Bloomberg reported that three investment firms—Situational Awareness Partners, Baillie Gifford and Coatue Management—have expressed intentions to purchase up to $7 billion in ADRs in the offering.
"For U.S. investors, Korean stocks, especially memory semiconductor companies, remain a scarce asset that is still difficult to access," said Nori Chiou, investment director at White Oak Capital. "This scarcity is supporting demand in this offering."
The market has also raised the possibility that the ADRs could trade at a higher price than the domestic common shares after listing. Bloomberg analyzed that there are certain restrictions on converting Korean-listed shares into ADRs, making typical arbitrage difficult, and in that case a premium could attach to the ADRs in the U.S. market.
There are, however, no shortage of variables. The offering is proceeding at a time when volatility in the global semiconductor sector has expanded sharply. SK hynix's stock has fallen 17% this month, and it is trading about 9% below the 242,500 won ADR-basis price stated in the filing submitted to the U.S. Securities and Exchange Commission (SEC). As a result, the possibility has been raised that the offering size could also be smaller than previously expected.
The changing AI investment environment has been cited as the backdrop for the increased stock volatility. As news spread that Meta Platforms is entering the cloud business of leasing out its spare AI computing resources externally, concerns spread that the pace of growth in high-bandwidth memory (HBM) demand could slow. As a result, the Philadelphia Semiconductor Index fell more than 10% over two days.
In addition, some analysts say that a $13 billion 2x leveraged ETF based on SK hynix shares is further amplifying stock volatility by repeatedly conducting mechanical trades to meet its target multiple.
