Why did SK Hynix's share price plummet after its listing on the US stock market?

Analysts say profit-taking, Q2 performance expectations, and the Bank of Korea's rate hike pressure are the main reasons for SK Hynix's sharp drop

On July 13, Asia-Pacific stock markets saw a collective correction, and the South Korean stock market plunged into a circuit breaker once again.

The South Korean KOSPI index extended its intraday decline to 8%, triggering a circuit breaker that suspended trading for 20 minutes. This marked the seventh time the South Korean stock market has triggered a circuit breaker this year, and the 13th circuit breaker in its history. By the close, the KOSPI index fell 8.95% to 6,806.93 points, accumulating a nearly 20% drop this month, with its year-to-date gain narrowing to 61.52%.

South Korea's "two semiconductor giants" both plummeted: SK Hynix closed 15.37% lower, down 35% from its all-time high in June, with its total market value falling below $900 billion; Samsung Electronics dropped 10.70%, retreating more than 30% from its June 19 high.

The selloff spilled over to U.S. stocks, where SK Hynix fell nearly 10% pre-market to $152, ending the U.S. session down 9.32%. In the previous trading day, it had closed up 12.8%.

On July 10, SK Hynix officially listed on the Nasdaq, with its offering price set at $149 per unit. On the first trading day, it opened at $170, about 14% above the offering price, and hit an intraday high of $177, raising approximately $26.5 billion in capital. This financing scale broke the U.S. IPO (Initial Public Offering) record held by Alibaba for more than a decade. Based on the closing price, SK Hynix's ADR traded at a roughly 17% premium to its underlying South Korean shares.

The leverage ETF (Exchange Traded Fund) saw even more staggering losses. On July 13, the CSOP South Korea 2x Long Hynix ETF listed in Hong Kong plunged 33% to HK$59.9, erasing nearly 70% in just 11 trading days from its all-time high of HK$193.65 on June 25. This ETF was listed in October 2025 with an issue price of HK$8.42, once surging more than 20 times. The CSOP 2x Long Samsung Electronics ETF also dropped over 20% that day, retreating more than 60% from its peak.

Market participants noted that 2x leveraged products amplify losses when the market falls, and this ETF had previously risen more than 20 times above its issue price, accumulating a large number of profit-taking positions.

Why did SK Hynix see a sharp drop just one weekend after its soaring U.S. stock market debut?

First, there is the arbitrage logic of "peak good news priced in". Yoo Young-ho, a senior analyst at NH Securities in South Korea, pointed out that after SK Hynix completed its U.S. listing, investors engaged in profit-taking. The positive catalyst of the U.S. listing had already been fully priced in during the previous sharp rise in South Korean shares, and the listing itself triggered sell pressure from "peak good news". The sharp surge on the ADR's first trading day not only overdrawn future expectations in advance, but also created a huge price gap between the U.S. and South Korean markets, prompting short-term capital to take profits and arbitrage positions to close out.

At the same time, market sentiment was also affected by brokerages lowering their performance forecasts. On July 13, local South Korean brokerage KIS Securities released a report on SK Hynix titled *Q2 Performance Preview: Sequential Margin Decline*. The report estimated SK Hynix's Q2 revenue at 80.9 trillion won (up 54% quarter-on-quarter and 264% year-on-year), and operating profit at 60.4 trillion won (up 61% quarter-on-quarter and 556% year-on-year). Although the absolute figures hit a new all-time high, the 60.4 trillion won operating profit fell short of the market consensus of 65 trillion won. KIS explained that the sequential margin decline was due to the high proportion of HBM shipments, as HBM products mostly adopt pre-negotiated pricing and long-term supply arrangements, leading to an average selling price growth rate lower than the overall market level.

However, KIS also emphasized that this is merely a normalization adjustment to earnings forecasts after taking HBM long-term supply agreements into account, and does not imply a slowdown in the industry's growth rate. The report remains optimistic about the outlook, with HBM4 expected to enter mass production and sales in the third quarter, maintaining the previously raised target price of 3.8 million won and a "Buy" rating.

But for an AI (Artificial Intelligence) leader that has already accumulated enormous gains, a single "below-expectation" result is enough to spark panic in the market.

The Bank of Korea released a report on July 13, attempting to calm market sentiment. It stated that the global semiconductor market is still in a state of supply shortage, and the new industry supercycle driven by AI is expected to continue for some time. It dismissed market concerns that "the chip cycle has peaked", emphasizing that the biggest difference between this semiconductor cycle and previous ones is that its driving force comes from competitive investments by enterprises to embrace the industrial ecological transformation brought by AI, rather than traditional cyclical demand. As customized products such as HBM are becoming the market mainstream, the expansion speed of semiconductor supply is more constrained than in the past.

Nevertheless, the Bank of Korea's remarks were interpreted by the market as concerns over AI-driven inflation, which instead intensified rate hike expectations.

Just on July 9, Bank of Korea Governor Rhee Chang-yong stated that it is necessary to raise interest rates at an appropriate time, noting that the central bank will take multiple factors into account, including inflation staying persistently above the target level and other financial risks. In a recent report, Moody's projected that the Bank of Korea's rate-setting meeting, scheduled for July 16, may raise the benchmark interest rate by 25 basis points to 2.75%, and argued that the July rate hike will be the start of a gradual tightening cycle.

Analysts pointed out that heightened tensions between the U.S. and Iran pushed oil prices higher, reviving inflation concerns, which in turn boosted rate hike expectations for both the Federal Reserve and the Bank of Korea, putting significant pressure on valuation-sensitive growth stocks such as chips.

International investment banks have also shown clear divergence in their judgments on the semiconductor industry's outlook. Morgan Stanley noted in a recent research report that the sequential growth rate of DRAM has narrowed from 58%-63% in the first quarter to 13%-18% in the third quarter, and NAND from 70%-75% to 10%-15%, emphasizing that this is a "peak rate of change" rather than an "end of the cycle". Goldman Sachs, on the contrary, concluded that there is no sign of a peak in the AI-driven tech cycle, no signal that supply has outpaced demand, and structural supply shortages will last at least until mid-2028.

This article is from the WeChat Official Account "Dushuyizhi" (ID: dushuyizhi007), written by Cheng Mengqi, edited by Guo Nan, and published with authorization from 36Kr.