Korean retail investors purchased over $613 million in SK Hynix American Depositary Receipts (ADR) on the New York Stock Exchange from listing through the 23rd, prompting criticism from global finance experts. Owen Lamont, Senior Vice President at Acadian Asset Management, described the price gap between SK Hynix ADR and its domestic shares as a 'completely insane level of price malfunction' on the previous day. He stated Korean investors are engaging in 'self-destructive behavior' by paying premiums for ADR shares when domestic shares are readily accessible at lower prices. The criticism comes as Korean investors net purchased $135.76 million in SK Hynix ADR during the one-week period from the 17th to 23rd, according to Korea Securities Depository. Lamont noted such ADR premium phenomena have historically appeared during stock market bubble periods including the dotcom and COVID bubbles.
Korean Investors Net Purchase $613.67 Million in SK Hynix ADR Through 23rd
According to the Korea Securities Depository's securities information portal Seibro, SK Hynix ADR ranked as the second most net-purchased stock by domestic investors during the one-week period from the 17th to 23rd. Korean retail investors' net purchase volume during this period reached $135.76 million (approximately 200.2 billion KRW). Cumulative net purchases from listing through the previous day (from the 10th to 23rd) totaled $613.67 million (approximately 904.8 billion KRW). During the same period, individual investors net purchased 1.035 trillion KRW in SK Hynix domestic shares on the Korean stock market, making the net purchase volumes of domestic shares and ADR nearly equivalent.
Acadian Asset Management Executive Criticizes ADR Premium as Self-Destructive Pattern
Owen Lamont, Senior Vice President at Acadian Asset Management, stated on the previous day that the price discrepancy between SK Hynix domestic shares and ADR represents a 'completely insane level of price malfunction'. Lamont stated, 'I really cannot understand why Koreans are buying ADR, and this is a self-destructive behavior pattern of Korean retail investors.' He explained, 'Whether the ADR price is too high or the domestic share price is too low is uncertain, but what is certain is that in a properly functioning market, the two prices should be the same. While the logic of foreign investors buying ADR is somewhat understandable, Korean investors buying ADR is truly incomprehensible.' Lamont criticized, 'Koreans can easily buy SK Hynix shares on the domestic stock market, yet they are paying $149 for stock worth $100.'
ADR Listing Surges Historically Coincide With Bubble Periods
Lamont stated that ADR premium phenomena are frequently observed during stock market bubble periods. He explained, 'Historically, whenever the US stock market becomes overvalued, foreign companies rush to list in the US through ADR and other methods.' Lamont noted, 'There is research showing that when the level of foreign company stock issuance in the US is abnormally high, subsequent US stock returns have been lower, and surges in ADR listings were observed during both the dotcom bubble and COVID bubble periods.'
FAQ
What volume of SK Hynix ADR did Korean investors purchase from listing through the 23rd?
Korean retail investors net purchased $613.67 million (approximately 904.8 billion KRW) in SK Hynix ADR from listing through the 23rd, according to Korea Securities Depository data. During the one-week period from the 17th to 23rd alone, net purchases reached $135.76 million (approximately 200.2 billion KRW).
Why did Owen Lamont criticize Korean investors' SK Hynix ADR purchases?
Owen Lamont, Senior Vice President at Acadian Asset Management, stated on the previous day that Korean investors are engaging in 'self-destructive behavior' by purchasing SK Hynix ADR at premium prices when domestic shares are readily accessible at lower prices. He criticized that Koreans are 'paying $149 for stock worth $100' and described the price gap as a 'completely insane level of price malfunction'.
What historical pattern did Lamont identify regarding ADR premiums?
Lamont stated that ADR premium phenomena are frequently observed during stock market bubble periods. He explained that historically, foreign companies rush to list in the US through ADR when the US stock market becomes overvalued, and surges in ADR listings were observed during both the dotcom bubble and COVID bubble periods.
