Memory chips sell off as China’s CXMT announces $8.6B IPO

SK Hynix stormed onto Wall Street last week with a $26.5 billion listing — the largest US debut by a foreign company in history — but the euphoria has since given way to a punishing sell-off that has swept across the memory chip sector.

From Blockbuster Debut to Sharp Reversal

The South Korean memory chip giant began trading on the Nasdaq on July 10 under the ticker SKHYV, opening at $170 per American depositary receipt, roughly 14% above its $149 offer price. The 177.9 million ADRs raised $26.5 billion, eclipsing Alibaba's ↘ 4.74% $25 billion IPO in 2014 as the biggest foreign listing in US market history.techcrunch+2

The rally proved short-lived. By the following Monday, US-listed shares had dropped 6% as a South Korean brokerage report suggested SK Hynix's operating profit for the current quarter could miss estimates. The stock continued to whipsaw through the week, at one point falling nearly 9% before rebounding, only to drop again on Wednesday alongside peers. On Thursday, SK Hynix and SanDisk ↘ 3.73% each fell around 7%, while Micron Technology ↘ 2.22% slid 5%, after China's CXMT announced an $8.6 billion IPO that stoked fears of rising DRAM competition.stockstotrade+3

Memory Stocks Enter Bear Territory

The broader memory sector has been caught in a steep downturn. The Roundhill Memory ETF (DRAM) has fallen more than 20% from its recent peak, officially entering bear market territory. On July 14, the fund posted a 4.54% decline and closed below a closely watched technical level for the first time since its inception. Stocks across the sector have retreated sharply after a scorching first-half rally — SanDisk had climbed 707% year-to-date through early July, Micron was up 243%, and SK Hynix had more than tripled in value on the Korea Exchange.seekingalpha+5

South Korea Moves to Curb Leveraged ETF Frenzy

Adding to the turbulence, South Korea's Financial Services Commission announced on Thursday a temporary ban on new listings of single-stock leveraged ETFs tied to Samsung Electronics and SK Hynix, according to Reuters. The regulator will also raise the minimum cash deposit required for retail investors to trade such products to 30 million won ($20,300) from 10 million won, effective August 5. The 14 existing leveraged ETFs tied to the two chipmakers had ballooned to a combined market capitalization of nearly 14 trillion won within their first month of trading, with retail investors comprising roughly 92% of holders. The Samsung KODEX SK Hynix Single Stock Leverage fund, the largest of the group, has plunged approximately 45% since its late-May debut.koreaherald+3

"These are high-risk products," Financial Supervisory Service Governor Lee said in earlier remarks that initially triggered a sharp sell-off in Seoul. FSC Chairman Lee Eog-weon said on a YouTube program this week that the regulator was in close talks with the finance ministry and the Bank of Korea to "protect investors and ensure market stability".finance.yahoo+1