Investors up in arms over KRX’s 'warning' on SK hynix

SK hynix headquarters in Icheon, Gyeonggi Province / Yonhap

Investors holding SK hynix shares are expressing frustration over the Korea Exchange's (KRX) decision to place the artificial intelligence (AI) chip maker under an “investment warning”, a measure that triggered sharp losses, market watchers said Friday.

Many say the bourse operator’s unreasonable regulatory priority is out of sync with the Lee Jae Myung administration’s drive to push the KOSPI to 5,000 points, accelerating a retail investor exodus from Korea to the U.S. equity market.

The say the collective stance is justified, since the “warning” is to curb small-cap shares prone to short-term manipulation, not large-cap shares leading the country’s monthslong artificial intelligence (AI) rally with robust performance and earnings outlook.

According to the KRX, SK hynix shares were placed under a warning on Thursday because its price closed more than 200 percent higher than a year ago, posting the highest closing price in the past 15 trading days.

This led to investors being banned from increasing holdings through stock or margin loans. Further price spikes could prompt a full trading halt.

The warning immediately led to about 4 percent price drop to lower than 570,000 won ($386), despite overall global equity markets buoyed by the U.S. Fed’s monetary easing.

Lee Ha-won, 40, a SK hynix shareholder, said the KRX measure is exactly why retail investors are leaving Korea.

“They just don’t get it. They probably never will. That’s the sad part,” she said.

The Lee administration has been adamant that the chronically undervalued KOSPI would jump to the 5,000-point milestone, but the country’s leading AI share being hamstrung by what she considers administrative incompetence is just evidence why Korea is still where it is, she said.

“I thought about buying U.S. tech stocks but went with SK hynix shares, expecting that the earnings outlook would remain strong throughout next year. I’m just finding it ironic that the government is promoting domestic stock investment, while still unable to understand what is wrong," she said. "The warning should be about eradicating stock price manipulation, not suppressing growth stocks accounting for 10 percent of KOSPI market cap from rising to where they should be.”

SK hynix shares closed at 571,000 won on Friday, up 1.06 percent from the previous session.

The KRX said the related regulations will be revised.