U.S. S&P 500 futures rose 0.87%, Nasdaq 100 futures rose 1.45%, and Dow Jones futures rose 0.87%.

Japan May leading index (final) 116.5; prior 116.8.

James Mackintosh, senior market columnist for The Wall Street Journal, stated that since SK Hynix's ADRs listed in the US two weeks ago, the premium between its Korean trading and US-listed ADRs has surged to between 16% and 51%. This is another sign of overheated AI trading and one of the market's "tendencies to pay too high prices for memory chip stocks." Such a large ADR premium is a typical anomaly that shouldn't exist in the market. Mackintosh explained that the restriction that SK Hynix's underlying shares cannot be converted into ADRs constitutes an investment risk. In a typical ADR scenario, the 29% premium seen last Friday (July 24th) would prompt hedge funds to buy shares in Korea and convert them into ADRs, while simultaneously shorting the ADRs in the US. However, he warned that, due to the impracticality of conversion, further widening of the premium could result in huge losses. If the underlying shares and ADRs were freely convertible, investors would buy the cheaper underlying shares (going long) and sell the more expensive ADRs (going short), thus narrowing the premium. However, the price difference persists due to difficulties in converting the underlying shares into ADRs. Furthermore, if the premium widens further, hedge funds borrowing shares to short the market could face even greater losses. Mackintosh also compared TSMC to SK Hynix, pointing out that the current premium for SK Hynix ADRs is excessive. Since the launch of ChatGPT in 2022, TSMC's premium has averaged 15%, meaning US investors are willing to pay significantly more than Taiwanese investors. SK Hynix's higher premium indicates that such demand in the US market is overly enthusiastic. ADR buyers might be okay if Korean stock prices rise and the premium falls, but they will suffer losses if the company uses its American Depositary Shares as a financing tool. The losses will be even greater if semiconductor stocks in both Korea and the US plummet and the premium narrows. In short, unless SK Hynix's stock price rises, the current market premium is likely to result in losses for investors buying ADRs in the US.