SK Hynix's Soaring Shares Trigger Forced Selling While Retail Traders and Leveraged ETFs Drive Demand

The numbers are staggering: SK Hynix has more than quadrupled over the past twelve months, closing at 2,333,000 won and notching a new 52-week high. The year-to-date gain alone stands at 245%. Yet that extraordinary rally has created a compliance headache for some of the fund managers who rode it up.

GAM Investment Management and Jupiter Asset Management are among the houses that have trimmed their holdings to stay within internal concentration limits. Goldman Sachs has warned that further price gains could mechanically generate additional passive selling pressure, though market participants believe the bulk of such forced sales may already be behind the stock.

While institutions pare back, South Korean retail investors are charging in the opposite direction. In May alone, foreign investors pulled a net 44.71 trillion won — roughly $29.7 billion — marking 16 consecutive trading days of outflows, the longest such stretch since February 2009. Analysts attribute the exodus to profit-taking, especially after SK Hynix's 1,145% advance over the previous year. Domestic individuals, by contrast, absorbed a record net 36.09 trillion won of shares.

The concentration at the top of the Kospi is staggering. Together, SK Hynix and Samsung Electronics command a combined market capitalisation of 3,516 trillion won, or 50.71% of the entire index. To put that in perspective, South Korea's nominal GDP in 2025 was 2,663 trillion won — meaning the two chipmakers alone are worth more than the whole economy of their home country. The phenomenon, dubbed the "core-sub strategy" by local analysts, has seen institutional money flood into the mega-caps and exit mid-tier names such as Hanmi Semiconductor and Samsung Electro-Mechanics.

Should investors sell immediately? Or is it worth buying SK Hynix?

A new layer of volatility arrived on May 27, when the Korea Exchange authorised 18 new leveraged and inverse exchange-traded funds tracking SK Hynix and Samsung. On their first trading day, these products churned through 9.8 trillion won in volume, and their combined assets under management swelled to 5.02 trillion won within just two sessions.

Operationally, SK Hynix sits on solid ground. First-quarter revenue came in at 52.6 trillion won, operating profit at 37.6 trillion won and the operating margin at a record 72%. Net cash stood at 35 trillion won after liquidity rose by 19.4 trillion to 54.3 trillion won and interest-bearing debt fell to 19.3 trillion won. The company commands a 57% share of the high bandwidth memory market, and management expects DRAM and NAND demand to keep climbing on the back of agentic AI applications, with favourable pricing across both categories. KB Securities has lifted its price target to 3.8 million won, describing the current cycle as the "five-kilometre mark of a marathon."

The near-term calendar brings two key tests. On Tuesday, South Korea releases May consumer price data; an upside surprise could weigh on the won and dampen risk appetite on the Kospi. Later in June, SK Hynix begins annual wage negotiations. The union is seeking housing loans of up to 500 million won per employee at a 1.5% interest rate, mirroring a similar deal at Samsung Electronics. The outcome will shape workplace sentiment for the rest of the year.

SK Hynix at a turning point? This analysis reveals what investors need to know now.

For the stock itself, the critical question is whether the rebalancing headwinds have been fully absorbed. A sustained hold above 2,333,000 won would signal that buying demand—from retail investors, leveraged products and fundamental conviction—is soaking up the forced sales. A slip below the prior close of 2,289,000 won, however, would hint that the rally's momentum is beginning to fade.

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