I’ve been observing the price action of SKHY and 000660 (the Korean-listed SK Hynix shares).
Below is the U.S. session performance following each Korean trading session.
**Results**
* **Identical movement direction: 9 out of 10 comparable sessions (90%)**
|Date|000660.KS|SKHY|Direction Match?|
|:-|:-|:-|:-|
|July 10|Up|Up|Yes|
|July 13|\-15.37%|\-9.32%|Yes|
|July 14|\+3.69%|\+27.29%|Yes|
|July 15|\+8.83%|\-9.00%|No|
|July 16|\-11.53%|\-13.69%|Yes|
|July 20|\-4.23%|\-1.86%|Yes|
|July 21|\+4.08%|\+13.75%|Yes|
|July 22|\-0.33%|\-3.88%|Yes|
|July 23|\+4.86%|\+2.56%|Yes|
|July 24\*|\-8.34%|\-6.28%\*|Yes|
\*The July 24 return for SKHY is intraday.
There was only one instance where the movement direction did not match.
On the prior session (July 14), SKHY gained 27.3% while 000660 gained only 3.7%. This pushed the SKHY ADR to roughly a 50% premium relative to the underlying Korean shares.
It is possible that, on July 15, the ADR was simply correcting that inflated premium. In other words, SKHY may have declined because it had become overextended relative to 000660, rather than because the market had turned bearish on SK Hynix itself.
This is obviously a small sample size. However, through the first 10 comparable sessions, the Korean market has done an excellent job predicting the direction of SKHY during the subsequent U.S. trading session.