SK Hynix Emerges as Top Chip Stock on Friday Despite Market Headwinds, Driven by Unique Circumstances

According to Barron's, SK Hynix (SKHY-US) saw its stock price rise on Friday (17th), likely due to the closure of South Korea's stock market, where the memory chipmaker is headquartered.

SK Hynix's American Depositary Receipts (ADRs) surged as much as 8.3% during trading but closed up 1.1% at $154.03. In contrast, its main U.S. competitor, Micron Technology (MU-US), ended the day down 0.5%. The ADR had previously plunged 14% on Tuesday.

Friday marked South Korea's Constitution Day (Jeheonjeol), a national holiday commemorating the promulgation of the country's first constitution, resulting in a one-day closure of the Seoul stock market. The trading halt allowed U.S. investors to accumulate SK Hynix ADRs at lower prices without worrying about overnight volatility in the Korean market.

Since its ADR listing on Nasdaq, SK Hynix's stock has experienced significant volatility. One contributing factor is the surge in retail investor participation from South Korea, who have been increasingly investing in SK Hynix and other tech stocks, often using leveraged ETFs and other high-risk financial instruments.

Currently, 10 shares of SK Hynix ADR are equivalent to one ordinary share traded in South Korea. Based on Friday's closing price, U.S. investors value SK Hynix at approximately $1,540.30 per share, representing a 24% premium over the local Korean stock price. Such a premium is not uncommon for ADRs, driven by higher U.S. investor demand and structural limitations in converting ADRs back into underlying shares.

Barron's has previously favored SK Hynix ADRs, suggesting they offer a more attractive alternative to U.S.-based Micron for investors seeking exposure to the memory chip boom.

According to FactSet, SK Hynix ADR's forward price-to-earnings (P/E) ratio stood at 5.71x as of Friday's close, slightly below Micron Technology's 5.89x.