[News Space=Reporter seungwon lee] On the 11th, the Korea Exchange designated SK Hynix (000660) and SK Square (A402340) as stocks under investment warning, completely restricting margin trading and trading on alternative exchanges (NXT). This measure follows a decision by the Market Surveillance Committee to protect investors, as the two stocks' one-year stock price increases exceeded 200% and the involvement of a small number of accounts in purchasing increased.

Background of the stock price surge and expectations for ADR listing

SK Hynix has surged 232.9% this year, reaching a record high, closing at 587,000 won as of December 10th. The stock has risen 43.98% over the past six months and 237.4% over the past year. The primary reason for the surge in stock price is the news that SK Hynix is ​​considering listing its shares on the U.S. stock market in the form of American Depositary Receipts (ADRs).

The ADR listing is expected to narrow the valuation gap with competitors like Micron. Kim Seon-woo, a researcher at Meritz Securities, analyzed, "Just formalizing the ADR listing could immediately revalue the stock price by about half the gap."

SK Square, an intermediate holding company with a 20.07% stake in SK Hynix, has seen its share price rise alongside its subsidiary's, leading to an increase in the parent company's net asset value (NAV). As of December 2, SK Square's stock price closed at 310,500 won, and foreign and institutional buyers have been buying the stock.

Trading Restrictions and Future Outlook

If a stock is designated as an investment warning stock, 100% of the deposit will be required for purchases, and any uncollected transactions or purchases using margin financing will be completely prohibited. NXT trading will also be restricted. If the stock price rises by more than 40% over two trading days following the designation, trading may be suspended. The decision on whether to lift the warning will be made based on daily stock price trends starting on the 24th.

Repeated warnings and market reactions

SK Hynix was previously designated as a stock under watch on November 4th, but its stock price declined, preventing it from being designated as a stock under watch. This time, expectations of an ADR listing have once again driven up the stock price, ultimately leading to its designation as a stock under watch. Lee Jong-wook, a researcher at Samsung Securities, estimates next year's operating profit at 84 trillion won and raised his target price to 750,000 won. However, the stock price, which has risen more than 240% this year, is considered a burden.

SK Square is experiencing improved investor sentiment due to the potential for a treasury stock buyback, shareholder return policies, and expectations for amendments to the Commercial Act. Discussions are actively underway regarding the potential for future stock price increases.