SK hynix U.S. Listing Draws Strong Demand, Trades 16% Above Korea

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "AI-based personalized news recommendation and summary service" developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. SK hynix ADR Debuts on Nasdaq, Surges 13%; Underlying Shares in Focus

- Key Summary: SK hynix American Depositary Receipts (ADRs) closed at $168.49 on their first day of trading on Nasdaq, up 13.1% from the offering price of $149. Converted into won, this is about 2.533 million won per Korean share, 16.2% higher than the 2.18 million won closing price on the Korea Exchange on the 10th. According to Shinhan Securities, SK hynix's securities lending balance surged 31.4% between June 23 and July 8, suggesting preemptive short selling by foreigners. Global investment banks (IBs) including Morgan Stanley are divided in their views, forecasting the premium gap in a range from 5-10% up to as high as the 30% level.

2. JP Morgan Secures More Than 5% Stakes in Four KOSDAQ Materials, Parts and Equipment Firms

- Key Summary: JP Morgan newly reported stakes of more than 5% in four KOSDAQ materials, parts and equipment firms — Leeno Industrial, TLB, MK Electron and Sungkwang Bend — on the 9th and 10th of this month. The valuation based on the closing price on the 10th was about 381.1 billion won, interpreted as reflecting expectations of earnings improvement from a strong semiconductor market and expanded AI infrastructure investment. The four companies' stock prices are around 40% below their highs for the year, but the second-quarter operating profit consensus for TLB and MK Electron is projected to rise 84.1% and 155.0% year-on-year, respectively. Through the 10th of this month, foreigners net bought 506.2 billion won in the KOSDAQ market, making Leeno Industrial the top net-buy stock.

3. Monetary Policy Board Survey: "Rate Hike This Month Certain, One More in Second Half"

- Key Summary: In a survey conducted by Seoul Economic Daily of 20 domestic economics and business professors and financial experts, all respondents said the base rate would be raised by 0.25 percentage point at the Monetary Policy Board meeting on the 16th. If this hike is carried out, it would be the first tightening decision in three years and six months since January 2023. Eighty percent of experts expected one additional hike during the second half following the July increase, while 25% left open the possibility of consecutive hikes in July and August. Meanwhile, experts raised their forecast for this year's real gross domestic product (GDP) growth rate to an average of 2.76%, driven by the semiconductor super cycle.

4. SpaceX 30-Year Bonds Fare Worse Than BB-Rated Debt

- Key Summary: According to the Financial Times (FT), the yield on SpaceX's 30-year bonds rose from 6.7% to 7.3% within two weeks of issuance, widening the credit spread to more than 2 percentage points over the U.S. 30-year Treasury yield (5.06%). The spread on BBB-rated SpaceX's 10- to 30-year bonds is higher even than the average for BB-rated, sub-investment-grade debt (1.55 percentage points). Oracle also showed higher risk on longer-maturity corporate bonds than other big tech firms. In the bond market, as big tech's bond issuance for AI infrastructure investment has doubled from last year, the trend of investors flocking to short-term bonds instead of long-term bonds has become pronounced.

5. Wall Street Primary Dealers Net Sell Corporate Bonds for First Time Ever

- Key Summary: According to Bloomberg, U.S. Treasury specialist dealers (primary dealers) recently took a net short position of $4 billion (about 6 trillion won) in corporate bonds. This is the first time since related statistics began in 1998, a large change compared with the average inventory of $16 billion (about 24 trillion won) in 2017. It is interpreted as an effect of corporate bond yields this week standing at an average of just 0.74 percentage point above U.S. Treasuries, narrowing the credit spread to its lowest level in decades. As of the end of last month, dealers net sold $13.7 billion of corporate bonds with maturities of five years or more, while net buying $9.66 billion of short-term corporate bonds, forming a contrast.

6. NH Investment & Securities (005940.KS): Target Price Raised, 35% Upside

- Key Summary: According to financial information provider FnGuide, NH Investment & Securities' average target price on the street is 42,750 won, offering more than 35% upside from the closing price of 31,600 won on the 10th. Daol Investment & Securities (030210.KS) raised its target price to as high as 51,000 won, citing expanded exchange-traded fund (ETF) trading volume in the second quarter and increased ETF trading within pension accounts as factors for earnings improvement. NH Financial Group recently decided on a rights offering of about 400 billion won for NH Investment & Securities to bolster capital, a move following the issuance of 500 billion won in hybrid securities in March this year. The street projected a dividend yield reaching the low-to-mid 7% range, based on the industry's highest three-year average shareholder return ratio of 50%.