SK Hynix’s 30% Gain This Year Under Pressure From Trump Trades

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(Bloomberg) — South Korea’s SK Hynix shares’ 30% rise this year, led by artificial intelligence, faces threats as political issues and valuations push local investors toward companies with a local business focus.

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Korean retailers are headed toward the biggest monthly withdrawal from the memory chip maker in at least a decade. With the stock on track for its best January performance since 2009, market watchers say the temptation to take some money off the table is high.

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Artificial intelligence leader Nvidia Corp lost ground this month due to concerns about competition and slowing growth. Meanwhile, Korean investors have turned to non-tech beneficiaries of President Donald Trump’s policies as well as smaller domestic stocks expected to enact corporate reforms.

“The market is paying more attention to issues that could see rapid changes after Trump takes office,” such as in the energy sector, said Ahn Heungjin, CEO of Seoul-based Billionfold Asset Management Inc. “I have concerns that if Nvidia’s rise stops, whether SK Hynix can achieve more.

Results due Thursday morning from SK Hynix are expected to show record quarterly net income of 5.9 trillion won ($4 billion). This comes as the company leverages its position as a leading supplier of high-bandwidth memory (HBM) chips to work alongside Nvidia’s AI processors.

Its stock price has more than doubled in two years on AI excitement, though that lags far behind Nvidia’s seven-fold gain. The broader chip sector, including memory, has been constrained by persistent concerns about slowing demand for automobiles and electronics.

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SK Hynix shares rose 3.4% on Wednesday, joining a rally across its regional peers, after US President Donald Trump announced a joint venture to finance artificial intelligence infrastructure.

Gary Tan, portfolio manager at Allspring Global Investments, said Korean investors may be taking profits on SK Hynix after its big gains, “as memory prices are still expected to trend lower in the first half of 2025.” Meanwhile, foreign investors who pushed the stock higher “may view memory as a laggard in the AI ​​space.”

SK Hynix’s rise has made the stock look expensive. Its trade-to-book ratio is 2.8 times, higher than the three-year average of 1.6 times. Beyond valuations, investors are being tempted away from the technology sector and into sectors including shipbuilding and nuclear energy due to expectations of support from Trump’s policies.

At home, some investors expect the opposition party’s corporate reform agenda to gain momentum after the impeachment of President Yeon Suk-yeol over his failed attempt to impose martial law. Small, domestically focused companies that have room to improve shareholder returns are seen as particularly benefiting.

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“There are many companies that could outperform through the trade law review,” said Marcelo Seongsu Ahn, portfolio manager at Quad Investment Management Co. “SK Hynix shares may rise but their gains will be outpaced by those companies.”

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(Updates YTD gains in headline and first chart and adds stock movement by 7)

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