An exchange-traded fund offering leveraged exposure to SK Hynix shares has experienced a sharp decline, falling over 22% in today's trading session.
As of the latest update, the Korea Double Long SK Hynix ETF (SEHK: 07709) was down 21.25%, trading at HK$70.4 with a turnover of HK$6.752 billion.
The sell-off follows broader market pressure on the underlying stock, with South Korean exchange operator Korea Exchange activating a "sidecar" circuit breaker mechanism on July 13th, temporarily halting programmatic selling on the KOSPI index.
During that session, shares of memory chip giant SK Hynix Inc fell nearly 10%.
This decline comes despite a strong debut for the company's American Depositary Receipts (ADRs) on the U.S. market last Friday, where they closed nearly 13% higher, pushing the company's market capitalization to approximately $1.23 trillion.
Market sentiment shifts post-listing
Market attention has now shifted to profit-taking activity following the U.S. listing, alongside growing caution over whether the company's second-quarter results can once again surpass market expectations.
Jason Minsang Kam, Head of Active Equity Management at Seoul-based Kyobo Life Insurance, noted that the positive momentum from the New York listing has already been priced in, suggesting the stock may face significant profit-taking and arbitrage-related selling pressure during the trading day.
Analyst revises quarterly forecast
Adding to the cautious sentiment, a report from South Korean brokerage KIS Securities has revised down its expectations for SK Hynix's second-quarter performance.
The report, titled "Q2 Earnings Preview: Sequential Margin Decline," outlines a "cautious short-term, optimistic long-term" view.
KIS Securities forecasts SK Hynix's second-quarter operating profit to reach 60.4 trillion won, which is 8% below the market consensus estimate of 65 trillion won.
The brokerage attributes the expected sequential decline in profit margin to a product mix heavily weighted toward High Bandwidth Memory (HBM) shipments during the quarter, which carried an average selling price below the broader market average.