SK Hynix’s 240% rally prompts Korea Exchange to warn investors

The exchange caution is a pre-warning before a higher-level alert is triggered, which would limit margin trading

A 240 per cent rally in SK Hynix’s shares this year has sparked an unusual exchange caution to investors, in a possible sign that the shares may be overheated.

Korea Exchange issued an “investment caution” on SK Hynix shares, a warning that remains valid for one day, the bourse said late Monday (Nov 3), citing the stock’s surge. The company’s shares fell as much as 5.3 per cent on the Korea Stock Exchange on Tuesday, the most in three weeks.

The top supplier of high-bandwidth memory to Nvidia has soared, tracking a rally in artificial intelligence-related stocks. The caution, rare for a large-cap stock, follows similar warnings for Doosan and Hanwha Ocean last month. The move, triggered by sudden or unexplained large changes in share volume or price, does not halt trading immediately, but it signals investors to proceed with caution.

SK Hynix’s shares rose nearly 11 per cent on Monday, taking its rise this quarter to about 70 per cent, which is more than three times the increase in the Kospi Index.

The exchange caution is a pre-warning before a higher-level alert is triggered, which would limit margin trading. If a stock under investment caution meets one of the eight criteria, such as rising 100 per cent in three sessions, the bourse will issue an investment alert. Following that, if the stock rises 40 per cent for two sessions, trading can be halted for one day. BLOOMBERG