SK Hynix ADR Premium Narrows by 4 Percentage Points as Global Chip Selloff Deepens

A global selloff in semiconductor shares has narrowed the price gap between contracts linked to SK Hynix Inc.'s US American depositary receipts and its South Korea-listed shares. With markets in South Korea, Japan and Taiwan tumbling together, the pressure could extend to US technology stocks.

Odaily, a crypto-focused media outlet, reported on July 28, citing HyperInsight data, that the premium on SK Hynix ADRs shrank by about 4 percentage points from roughly 33.0% a day earlier. On a share-adjusted basis, SKHY was valued at about $1,379.1, or 28.9% above SKHX.

On Hyperliquid that day, SKHX, the contract linked to SK Hynix's South Korean shares, traded at $1,069.5, while SKHY, the contract tied to its US ADRs, stood at $137.91. Over the same period, SKHX fell 13.5% and SKHY dropped 16.2%.

Selling spread across Asian equity markets, led by chip stocks. South Korea's Kospi index slumped as much as 11% intraday on July 28, while Samsung Electronics Co. and SK Hynix each sank more than 13%. Japan's Nikkei 225 and Taiwan's benchmark index, both heavily weighted toward semiconductor stocks, each fell about 4%.

US technology shares may also come under pressure as concerns mount over returns on AI investment amid intensifying competition from Chinese companies. Citigroup said long positions in the Nasdaq 100 Index remain underwater, raising the risk of a further market correction.

"It is entirely reasonable for investors to reduce their exposure to semiconductor stocks, and this is the time to take profits and diversify assets," Vincent Juvyns, ING's chief investment strategist, said.

He added that earnings prospects for the semiconductor industry remain positive over the next several years. The latest selloff is a normal correction within the sector's longer-term growth trend.