Wall Street Journal columnist James Mackintosh says SK Hynix’s US ADR has traded
at a 16–51% premium to the Korea-listed shares since the ADR’s US listing two
weeks ago, peaking at a 29% premium on July 24. He calls the gap a sign of
overheated AI-related trading and notes conversion restrictions on the
underlying Korea shares block ordinary arbitrage (buy Korea/convert to ADR/sell
US), allowing the premium to persist. That structural impediment raises the risk
of large losses for funds if the premium widens further — short positions or
borrowed-stock hedges could be squeezed. By contrast, TSMC’s average US premium
since the 2022 ChatGPT launch is ~15%, making SK Hynix’s current premium
unusually elevated. Mackintosh cautions US ADR buyers are likely to incur losses
unless Korea-listed shares rise; use of ADRs for financing would magnify those losses.
