"Don't buy and sell. Just hold on to it."
That was the advice SK Group Chairman Chey Tae-won gave on SK hynix (000660) shares about three months ago. The stock, however, remains nearly 60% below its peak. Many retail investors who bought near the high are now sitting on losses, unable to sell or add to their positions.
SK hynix was trading at 1.254 million won as of 1:30 p.m. on the 23rd, up 31,000 won, or 2.53%, from the previous session, according to the Korea Exchange. The stock had fallen to 1.171 million won early in the day in the wake of a plunge in U.S. semiconductor stocks before turning higher.
The Philadelphia Semiconductor Index tumbled 6.72% overnight on concerns over Meta's artificial intelligence spending and higher oil prices driven by tensions in the Middle East. SK hynix closed the previous session down 5.49% at 1.223 million won.
The rebound was attributed to the company's decision to halt a review of a listing for Solidigm, its U.S. subsidiary. Before the market opened, SK hynix said in a regulatory filing that it had suspended its review of a pre-IPO funding round and an initial public offering for Solidigm. Shareholders had worried that a separate listing for Solidigm could erode corporate value through a discount tied to duplicate listings. Financial Services Commission Chairman Lee Eok-won said the previous day that rules on duplicate listings would apply to an overseas listing of Solidigm.
Still, supply-and-demand pressure remains after the end of a large share buyback that had supported the stock. SK hynix completed a buyback worth about 40 trillion won on the 21st, roughly a month ahead of schedule. During the buyback period, from Aug. 20 to Oct. 21, institutions and foreign investors sold a net 2.6812 trillion won and 25.6628 trillion won worth of shares, respectively. With the company no longer absorbing those shares, analysts said the cushion supporting the stock has weakened. Daishin Securities (003540) said the end of the buyback does not immediately signal a sustained decline but that short-term volatility could increase.
Against that backdrop, Chey's earlier remarks are drawing renewed attention. Speaking at the Korea Chamber of Commerce and Industry's summer forum in Jeju Special Self-Governing Province on July 17, Chey said demand for memory chips would continue and that the stock would rise over the long term. The shares have struggled to recover since.
The losses have been concentrated among retail investors who bought heavily near the peak. Individuals bought a net 31.502 trillion won worth of shares from April through June, when the stock hit its high, including 15.633 trillion won in June alone, when it reached a record.
In July, as the stock plunged from the 2.5 million won range to 1.3 million won, individuals bought another net 9.001 trillion won worth of shares to average down. But with the stock falling to around 1.2 million won, they were unable to avoid losses. According to an analysis by NH Investment & Securities (005940), 74.18% of investors holding SK hynix shares were underwater as of the 19th.
Attention now turns to third-quarter earnings due on the 28th. SK hynix plans to disclose additional shareholder return measures alongside the results. According to financial data provider FnGuide, SK hynix is expected to post third-quarter operating profit of 76.964 trillion won, which would be a record for a quarter. With expectations for strong results already priced in, however, additional shareholder returns are seen as the key variable for a rebound.
Meritz Securities (008560) said the stock's expected price-to-book ratio for next year stands at 1.10 times based on the 22nd's close, near a historical low, and that stronger shareholder return measures could highlight its undervaluation.
Kim Sun-woo, an analyst at Meritz Securities, said of the halt to the Solidigm listing review: "We judge that the company has declared that enhancing shareholder value is its top priority, ahead of the growth strategy it had envisioned." He added, "We expect more effective and concrete measures to enhance shareholder value to be presented at the upcoming earnings call."