SK Hynix drops in Seoul after strong first day on Nasdaq

SK Hynix gave investors a reminder that a hot U.S. listing can still create turbulence at home. The South Korean memory-chip maker’s shares fell more than 10% in Seoul on Monday, after its Nasdaq-listed shares gained 13% in their Friday debut, according to CNBC.

For everyday investors, the move is about more than one rough trading session. SK Hynix is a major supplier of memory chips used in artificial intelligence systems, so its stock has become a way for investors to bet on AI infrastructure demand. Monday’s drop showed how quickly pricing can get complicated when the same company trades in more than one market.

CNBC reported that investors were taking profits, meaning some holders sold after earlier gains to lock in returns. The decline also reflected questions about how SK Hynix’s new U.S.-listed shares should be valued compared with its Korean shares.

The Nasdaq listing created another reference point for investors. A U.S.-listed ADR, or American depositary receipt, lets investors buy exposure to a foreign company through a security that trades on a U.S. exchange. When an ADR and a domestic share both trade, investors often compare the two prices to judge whether one market is assigning a premium or discount.

Daniel Yoo, global strategist at Yuanta Securities, told CNBC’s “Squawk Box Asia” that investors were uncertain about memory-chip demand, future supply and the valuation multiple SK Hynix should receive. A valuation multiple is the price investors are willing to pay relative to a company’s financial performance.

Yoo pointed to Taiwan Semiconductor Manufacturing Co. as a comparison, saying its U.S.-listed ADRs trade at about a 13% to 14% premium to its domestic shares. He said SK Hynix’s sharp U.S. move created a discount of more than 20% between its American and Korean listings.

Yoo also said the offering’s structure added pressure because it increased the amount of stock available to investors. He described the Seoul sell-off as a correction period for SK Hynix’s domestic shares.

Even so, Yoo told CNBC he viewed the pullback as temporary, citing AI-related demand that continues to exceed supply. He said the stock would likely move “in the right direction” over the next six to 12 months, while also pointing to short-term volatility.

Phillip Wool, chief research officer at Rayliant Global Advisors, gave CNBC a similar read on the broader group of Asian AI hardware stocks. He said recent weakness looked more like portfolio rebalancing than a sign that investors had lost confidence in the industry.

Wool said many investors had built large positions in South Korean and Taiwanese AI chipmakers after strong gains, and that reducing those positions was a form of risk management. He added that the selling did not point to a decline in enthusiasm around AI hardware, and said broader AI investment should still support memory suppliers such as SK Hynix.

This story draws on original reporting from CNBC.