Why Americans Pay 41% More For SK Hynix Shares Than Koreans
Ten ADSs represent one Seoul share, so each ADS's slice was worth about $130.88. Comparing those two closing prices gives the ADSs a 40.7% premium. The markets close at different times, so the comparison also captures price moves in between.
Most foreign stocks listed in New York do not trade this way. As of October 1, 28 of the 32 US-traded foreign stocks I track against their home listings were within 5% of parity.
SK Hynix has the widest gap on the list, making it a useful test of how much of the“Korea discount” reflects how easily investors can buy the shares.
What exactly are Americans buying?SK Hynix sold 177.9 million ADSs at $149 each on July 9, raising $26.5 billion in the largest ADS offering on record. The shares began trading the next day and now trade under the ticker SKHY.
Before that, most Americans could reach SK Hynix only through a thinly traded over-the-counter line. Samsung Electronics, the other Korean memory giant, still has no US exchange listing.
SKHY traded about 20 million shares a day on average in the two weeks through September 30, worth more than $3.5 billion a day at the September 30 price.
Normally, when an ADR trades above its home shares, brokers buy the local stock and convert it into new ADRs until the gap closes. That route is restricted for SK Hynix.
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