SK Hynix successfully completed a $26.5 billion American Depositary Receipt (ADR) offering and Nasdaq listing, but its shares subsequently plunged more than 10% in South Korea, prompting forecasts that finding a “second SK Hynix” will be no easy task. Market participants characterized the case as a unique convergence of a pivotal role in the AI supply chain and perfect timing, noting that other Asian technology companies cannot simply follow the same playbook.

SK Hynix ADRs closed their first day of trading on the Nasdaq on July 10 (local time) at $168.01, up 12.76% from the $149 offering price. It was the largest-ever public offering by a foreign company listed on a U.S. exchange, attracting demand more than seven times the initial offering amount. However, when South Korean markets reopened after the weekend on July 13, SK Hynix shares on the Korea Exchange tumbled as much as 10.18% intraday to 1.96 million won (approximately $1,312), with foreign media reporting an intraday plunge exceeding 15%—the stock’s steepest drop on record.

A confluence of factors drove the sell-off. The massive new share issuance created supply overhang, while arbitrage trading exploiting the price gap between U.S. ADRs and the underlying Korean shares exerted selling pressure on the local stock. One ADR represents 0.1 of a Korean common share, and based on the first-day closing price, U.S. ADRs commanded a roughly 16% premium over the Korean listing—a so-called “reverse kimchi premium”—prompting investors to sell Korean shares and rotate into U.S. ADRs as they rebalanced portfolios.

Kwon So-sung, a researcher on Korean Peninsula issues at the Korea Institute for International Economic Policy, explained that “much of the positive news from SK Hynix’s Nasdaq listing was already priced in by the market, and some investors moved to lock in profits as soon as Korean trading opened.” Adding to the gloom, domestic securities firms issued forecasts that second-quarter operating profit could fall short of market expectations. Analysts noted that a higher share of HBM (high-bandwidth memory) revenue may actually cap average selling price (ASP) gains, and the large-scale HBM4 chip shipments the market had anticipated did not materialize in the second quarter.

The broader global equity backdrop compounded the headwinds. The Kospi index plunged 9% that day, triggering a 20-minute circuit breaker, with Samsung Electronics and other large-cap semiconductor stocks tumbling in tandem. In Europe, semiconductor equipment stocks including ASML, ASMI, and Besi fell 1% to 2%, while in the U.S., Micron and Western Digital dropped 5.4% and 6.5%, respectively, as selling pressure swept across global chip stocks. Morningstar director Lorraine Tan assessed that “while the memory upcycle is stronger than expected, our base case still assumes a normal cyclical pattern, limiting further upside from current levels.”

Against this backdrop, expectations are dimming for a rush of U.S. listings by Asian tech firms hoping to become the “next SK Hynix.” Ophir Gottlieb, CEO of Capital Market Laboratories, told Reuters: “SK Hynix is large, highly liquid, essential to AI, and yet difficult for many U.S. investors to hold directly—that’s a unique combination. The timing of this listing was near-perfect, but that perfection will erode with each passing day.”

Giuseppe Sette, co-founder of AI investment analytics platform Reflexivity, echoed the sentiment: “SK Hynix succeeded because it filled the ‘AI memory’ gap in U.S. investor portfolios at the peak of enthusiasm, as the number-one player in HBM for Nvidia processors. No one should expect the same reception for ‘second movers’ without clear AI linkages or scarcity value.”

Meanwhile, SK Hynix’s Nasdaq debut has triggered a rush among global asset managers to launch leveraged and inverse ETFs tied to the ADR. Leverage Shares rolled out “SKHX,” which seeks to deliver twice the daily return of SK Hynix ADRs, and the inverse product “SKHZ” on July 13, while ProShares launched the 2x leveraged ETF “SKHU” the same day. GraniteShares and Koge Funds plan to debut “SKUU” and “SKDD,” respectively, on July 14, and Direxion is also considering launching “SKHL.” According to Reuters, at least 10 asset managers have filed applications with U.S. regulators for single-stock ETFs linked to SK Hynix.

These single-stock leveraged ETFs use derivatives such as futures and swaps to target twice the daily return, making them high-risk products where investor losses can escalate rapidly in volatile markets. Concerns are mounting that the absence of daily price limits for individual stocks in the U.S. market could further amplify volatility in SK Hynix ADRs.

Wall Street views on SK Hynix are sharply divided. Sam Konrad, portfolio manager at Jupiter Asset Management, said the listing “could serve as a catalyst to re-rate the stock’s lower price-to-earnings ratio relative to Micron,” expressing optimism about dividend increases and share buybacks. Richard Clode, portfolio manager at Janus Henderson, called it “significant in providing U.S. and global investors their first opportunity to invest in the HBM leader.” On the other hand, Thomas Hayes, chairman of Great Hill Capital, struck a cautious note: “The issuer, SK Hynix, may be taking advantage of what it views as an overvalued stock price.” Rolf Bulk, head of research at Futurum Group, argued that “the Korea discount is unlikely to be fully resolved,” flagging the risk that SK Hynix’s HBM market share could decline over the long term.

Amid the debate, SK Group is stepping up engagement with global investors. On the night of July 12 (South Korea time), SK Group Chairman Chey Tae-won held a live-streamed conversation with Daniel Newman, CEO of Futurum Group, at the Nasdaq MarketSite in New York, unveiling the group’s AI semiconductor strategy centered on HBM, global investment plans, and its broader AI vision. The event, held immediately after SK Hynix closed the record ADR offering, drew keen interest from global investors.

SK Hynix plans to deploy the entire $26.5 billion in proceeds toward construction of the first-phase fab at the Yongin Semiconductor Cluster, an advanced packaging facility in Cheongju, and procurement of EUV (extreme ultraviolet) lithography equipment. SK Hynix CEO Kwak Noh-jung forecast that “2027 will be the tightest year for memory semiconductor supply,” with shortages persisting beyond 2030.

Daniel Yoo, global strategist at Yuanta Securities, said “U.S. ADRs are commanding a higher valuation than Korean shares, and the market is in the process of finding an equilibrium price between the two. The increase in shares outstanding from the ADR issuance also exerted short-term downward pressure, but we expect a recovery within six to twelve months.” However, the potential for overseas funds to migrate from domestic Korean shares to the more convenient and cheaper Nasdaq ADRs remains a headwind for South Korea’s equity market. Because ADRs trade in U.S. dollars, investors can also benefit from currency gains if the dollar remains strong, though South Korean retail investors should note that capital gains exceeding 2.5 million won (approximately $1,675) per year are subject to a 22% tax.