SK Hynix shares fell more than 15% during Monday trading, recording the biggest daily drop in its history, as investors in Seoul moved to take profits after the strong rise the stock saw following its listing on the Nasdaq stock exchange last week.

The decline in SK Hynix shares, along with those of its competitor Samsung Electronics, contributed to a 9% drop in the KOSPI index, leading to a 20-minute trading halt, according to Reuters.

Korean stocks continued their losses after trading resumed, despite President Lee Jae-myung's announcement on Monday that his government would offer government support to three major projects including semiconductors, AI data centers, and physical AI.

SK Hynix, a global leader in producing AI memory chips, raised over $26 billion last week by selling American depositary receipts at $149 per receipt, after the price of its South Korea-listed shares more than tripled since the start of the year.

The American depositary receipts opened trading up 14% above the offer price, at $170, before closing the first trading session up 12.8%.

Lorraine Tan, director at Morningstar, which values the company at $160 per receipt, said: 'The current recovery cycle in the memory chip market is much stronger than expected, but our base scenario still assumes that cycle dynamics will return to normal levels, which limits the prospects for further upside at current levels.'

She added: 'Although the pace of AI technology adoption is accelerating, achieving profitability remains uncertain, and the profitability of leading companies like OpenAI appears to be under pressure. Financing is also increasingly turning to debt or equity issuance, raising concerns about the sustainability of current spending levels.'

SK Hynix shares have seen sharp fluctuations this year, becoming a focus of global investors who are betting on continued profit growth amid a shortage of high-bandwidth memory chips used in AI data centers, while many investors have turned to leveraged ETFs, which have amplified both gains and losses.

In Hong Kong, a leveraged ETF tracking SK Hynix shares, offered by asset manager CSOP and using leverage to achieve twice the daily return of the stock, lost more than a third of its value on Monday, recording its biggest daily drop since its launch in October.

After the sharp decline in the Seoul market on Monday, SK Hynix's American depositary receipts, each representing one-tenth of a share, settled at $168 on Friday, trading at a premium of about 37% compared to the stock price in South Korea.

James Ooi, market strategist at Tiger Brokers in Singapore, said: 'Companies listed in both the US and their home markets often trade at a premium in the US, benefiting from easier investor access, higher liquidity, and stronger valuation support.'

He added that arbitrage opportunities are limited due to the difficulty of converting Korean shares into US-listed American depositary receipts.

Ryu Young-ho, a senior analyst at NH Investment & Securities, said investors moved to take profits after the US listing was completed, and market sentiment was also affected by caution over SK Hynix's second-quarter results.

He added that investors had expected an increase in shipments of fourth-generation high-bandwidth memory chips (HBM4) compared to the second quarter, but that increase did not materialize on a large scale.

Ryu noted that investors lowered their earnings expectations because SK Hynix, given its greater dominance in the high-bandwidth memory market compared to its local competitor Samsung Electronics, would benefit less from the recent rise in traditional DRAM chip prices.

According to data from Counterpoint Research, SK Hynix led the high-bandwidth memory market with a 58% revenue share in the first quarter, while Samsung Electronics and its US competitor Micron Technology each had a 21% share.

High-bandwidth memory chips are primarily used in AI systems by customers including Nvidia and Google, a subsidiary of Alphabet.