SK Hynix ADR Trades at ~50% Premium to Korea Shares, Signals Market Bubble Risk

According to Owen Lamont, portfolio manager at Acadian Asset Management, on July 24, SK Hynix's U.S. ADR (American Depositary Receipt) traded at approximately 50% premium to its Korean home shares, approaching levels unseen since the dot-com bubble.

Lamont flagged this as a violation of the Law of One Price and warned of market overheating. The ADR premium has reached as high as 49%, far exceeding peers like KB Financial and Shinhan Financial (both near 0%) and Taiwan Semiconductor Manufacturing Company (approximately 15%). Lamont likened the divergence to the 2000 dot-com bubble, when Indian software company Infosys ADRs soared to a 136% premium. He cautioned that if SK Hynix's premium expands further, arbitrage traders could face severe losses, while Korean retail investors have purchased over $500 million of ADRs at inflated prices—a behavior he termed self-damaging.