Svmuu News: SK Hynix ADRs and its Korean-listed common stock are expected to become convertible in both directions by the end of this month, but the arbitrage opportunities that individual investors had previously anticipated are unlikely to materialize. Although the two are interchangeable in principle, investors may find it difficult to convert them as freely as they would trade common stock.
The Korea Securities Depository (KSD) stated on the 16th that mutual conversion between SK Hynix ADRs and Korean common stock will become possible after the 29th (the scheduled listing date for the newly issued Korean common stock). However, the actual conversion process is subject to several conditions. Converting Korean common stock into ADRs can only be done within the ADR issuance limit set by the issuer. For example, if the ADR issuance quota corresponds to 1 million shares of common stock and 900,000 shares have already been issued, only 100,000 shares remain available for new conversions. Conversely, there is no separate issuance quota limit for converting ADRs back into Korean common stock.
Industry insiders believe it is difficult for individual investors to use this as an actual investment strategy. Converting common stock to ADRs requires submitting a separate application through a brokerage firm and involves procedures such as foreign exchange conversion. Since the procedures vary among brokerage firms, the conversion cannot be completed instantly via mobile or online trading systems, as is the case with regular stocks. (Jin Shi)