SK Hynix debuts on Nasdaq. Will that bridge its ‘Korea discount’? 

As global chip giant SK Hynix makes its Nasdaq debut Friday, the listing will test whether the stock will be able shed its long-standing “Korea discount.” 

“Korea discount” refers to the tendency of South Korean companies to trade at lower valuations compared to global peers due to concerns over corporate governance and opaque conglomerate structures.

The listing on the Nasdaq via American depositary receipts, or ADRs, is set to grant SK Hynix direct access to the world’s deepest pool of capital, a move that experts debate could narrow this discount.

LSEG data showed SK Hynix trades at just 4.8 times 12-month forward earnings, compared with the industry median of 29.84 times and U.S. rival Micron Technology‘s 6.6 times, despite its leadership in the fast-growing high-bandwidth memory, or HBM, market.

“We see room for that gap to narrow with the ADR listing, though we do not expect the Korea discount to close entirely,” Rolf Bulk, head of semiconductors and infrastructure at Futurum Group told CNBC.

The divergence in price-to-earnings ratios between Micron and SK Hynix is mainly due to “access” and “familiarity,” as SK Hynix’s limited accessibility for U.S. funds has kept its valuation lower for years despite its stronger position in AI memory, said Zavier Wong, market analyst at multi-asset trading platform eToro.

“Hynix’s stock going up isn’t the same as the discount shrinking, so while its price moved up, the gap against Micron didn’t budge,” Wong said. 

Shares of Micron have surged nearly 250% this year, while SK Hynix has soared 240%, LSEG showed.

Peter Kim, global investment strategist at KB Financial Group, echoed that the listing should also improve access for overseas investors who have historically faced hurdles in buying Korean equities.

“Additional access could help global investors trade the Hynix stock, which still trades at a discount to the KOSPI, Micron, and Samsung,” he said. “A Nasdaq listing would be a major factor in narrowing that discount, as the listing requirements needed to list there would ease some concerns among U.S. investors.”

Nasdaq listing rules require companies to meet financial and liquidity thresholds, including minimum market value, public float, shareholder count and share-price requirements. Listed companies are also subject to corporate governance standards covering areas such as audit committees, director independence and shareholder voting rights.

With ADRs priced at $149 apiece and the IPO oversubscribed, the company will raise about $26.5 billion, but analysts said access to U.S. investors could ultimately prove more valuable than the capital itself.

Ji Cheong, associate director at S&P Global Ratings, said that while SK Hynix’s IPO…