SK Hynix stock jumped 10% in market trading on Tuesday. The memory-chip company looks to be reaping the benefits of its recent U.S. listing as its American depositary receipts outpaced its South Korean shares.
SK Hynix shares closed up 3.7% at 1.913 million won ($1,279.90) in South Korean trading Tuesday. However, the stock was significantly volatile during the day, at one point dropping more than 8%. Korean retail investors have been piling into SK Hynix and other technology stocks for much of the year, with increasing use of aggressive tools such as leveraged exchange-traded funds.
Meanwhile, American depositary receipts of SK Hynix were gaining 6.2% to $161.83 in Tuesday’s premarket. As 10 ADRs represent one share of SK Hynix, the price suggests American investors are valuing the company at $1,618.30 a share—or a 26% premium to the South Korean shares.
ADRs can trade at a significant premium to the underlying shares due to the size of the U.S. investor base and obstacles to converting between the two instruments.
Barron’s has written positively about the ADRs, suggesting they offer a cheaper way to play the memory-chip boom than U.S. company Micron Technology. SK Hynix ADRs traded at a forward price-to-earnings ratio of 5.71 times as of Monday’s close, according to FactSet, compared with 6.55 times for Micron.
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