UBS: Buy SK Hynix's upcoming ADR, sell its Seoul-listed shares

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Jinse Finance reports that on July 7, UBS Group stated that investors should buy SK Hynix's planned American Depositary Receipts (ADRs) and sell the chipmaker's Korean-listed shares, as the former may trade at a premium. The Swiss bank's sales and trading department noted in a report to clients that these ADRs may be more attractive to investors such as hedge funds than Korean stocks due to higher holding efficiency and lower costs. The report also pointed out that some global portfolio managers who do not hold its Seoul-listed shares may also be able to purchase these U.S. securities. "Going long its ADRs from day one and shorting its Korean shares sounds like there's little to hesitate about," the UBS report said. "Given that an ADR discount is unlikely, the risk is very limited, making this a trade that can be executed on a very large scale."
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