SK Hynix’s 26.5bn American Depositary Receipt (ADR) listing in New York last week was a landmark for the South Korean chipmaker, its bankers and investors. The ADRs surged 27% on Tuesday, recouping a 9.3% fall the day before and pushing the premium over the Seoul‑traded common shares to 51% – far beyond the 3% gap priced at launch.

Economists expect the same asset to converge at one price, the law of one price (LOOP), but real markets show distortions from capital controls and regulatory differences. In practice, arbitrageurs exploit price gaps, yet SK Hynix’s Korean shares have fallen slightly since the ADR debut while the ADRs rally hard, creating a valuation gap of about $415bn.

The ADRs convert at a 10-to-1 ratio, but until July 29 investors cannot settle the arbitrage. Borrowing ADR stock is near impossible, so demand for the ADR inflates a liquidity premium. A 51% premium is huge compared with the usual under‑5% spread, reflecting enormous US flows into memory at this exceptional moment.

While the premium could close when Korean shares list, won volatility may keep the spread alive. SK Hynix’s situation is a reverse kimchi premium, a rare but possible market oddity in a capital‑controlled South Korea.