@bauhiniacapital @aklabak @MarkosAAIG I understand the epistemological point but there are unknown unknowns about everything. What are the pros worried about exactly
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@dthtown @aklabak @MarkosAAIG Yes. I assume all pros looking at the situation also know that. I assume they know the history of Korean ADR programs expanding ADR count beyond original issuance amount. I stipulate all known knowns.
I believe there are known unknowns. Those may be unknown unknowns to others.
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@dthtown @aklabak @MarkosAAIG Am familiar with that page. Technically available headroom under the ADR and actually available-on-demand-without-additional-approvals-being-received headroom are expected to be different.
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Everyone's talking about the 25% premium on $SKHY vs the Korean shares and assumes that July 29 kills it.
When conversion opens:
-ADR -> Korean shares: uncapped. Easy.
-Korean shares -> new ADR: capped by the issuance limit.
Arbitrage only closes a gap cleanly when traders can push it from both sides. Here they can only lean on it from one.
So premium won't likely go to zero, instead premium will probably shrink and then park at a floor.
NFA, DYOR
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@bauhiniacapital @aklabak @MarkosAAIG You can find the headroom for KSD here :
ksd.or.kr/en/resource-ce…
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@aklabak @MarkosAAIG The lowest common denominator is not the Citi program terms but what local regulators decide to allow in terms of headroom (i.e. additional shares held at KSD against new ADRs).
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$SKHY ADR sits 20%+ over Seoul. Not a structural premium. the arbitrage just frozen until July 29, when conversion opens. Then you can buy the cheap line and convert up. Convergence hits Seoul, not the ADR. Watch Citi’s terms tho
As the US ADR can be capped for now.
Jukan@jukan05
KOREAN LOCAL MEDIA: ARBITRAGE BETWEEN SK HYNIX’S KOREAN-LISTED COMMON SHARES AND NASDAQ-LISTED SKHY IS CURRENTLY MALFUNCTIONING According to the Korea Securities Depository, actual applications for two-way conversion will only become possible after July 29, when the newly issued Korean common shares corresponding to the ADR offering are listed domestically. The KSD stated, “Applications for conversion between SK hynix’s underlying common shares and ADRs are expected to become available only after July 29, the scheduled domestic listing date of the underlying shares.” It added that the actual conversion timetable will be announced in accordance with instructions from the DR depositary, Citibank. $SKHY
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@JulianKlymochko What do you think of long local 000660 and short adr $skhy with conversion coming up on July 29?
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SK hynix currently trades at 3.8x next year's earnings.
Paradoxically, $SKHY may be the most contrarian long in the market, despite being up +493% over the past year.
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@lamichaelpenny @0xThoor The Korea securities depository shows headroom though:
ksd.or.kr/en/resource-ce…
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Former ADR arb trader here....its conceptually similar in terms of being a "one way fungible" trade: can always redeem for local but creations are limited by whats called "headroom". When there is no creation capacity (which there isn't), the "arb" isn't just difficult....there is no arb. Non-fungible spread trade, yes....'arb', no.
In the case of SK Hynix, the company has to authorize additional creations, which they rationally wouldn't when the ADR is trading at a premium (they can benefit from the premium by selling shares in the US as less dilutive source of $'s).
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A similar story to SKHY/SKHYNIX is TSM/2330 i.e. the TSM ADR, which was issued back in 97' at a 1:5 ratio against TSMC (ticker 2330 on the Taiwanese stock market).
My understanding is that the arbitrage is difficult to perform when the ADR trades at a premium (as seen below).
There is a limit on ADR issuance (converting Taiwan-listed shares into TSM), and therefore a limit to how easily the spread can be closed when TSM trades at a premium to TSMC.
Not sure how similar this is to the current SKHY/SKHYNIX situation so keen to hear opinions/insights.
If it is similar and there's a strict limit on ADR issuance it could potentially mean that the premium persists for longer?
Chart slightly overstates premium at times due to differences in open hours on the American vs Taiwanese market.
Thor@0xThoor
Created a dashboard to track the SKHY/SKKHYNIX 'arb' on Hyperliquid. Current price spread at around 34% and appears conversion might be possible starting in ~14 days. Keep in mind: · The spread could widen significantly from here before closing · Funding costs are fairly high. ~2% cost holding the position open in the past 3 days alone Dashboard lets you monitor both the price spread and funding rates on each perp. Check it out: skhy-dashboard.vercel.app
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@aleabitoreddit Where do you get the 22.5% additional that can be converted into ADR?
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For anyone watching the 25%+ premium in $SKHY versus SK Hynix's Korean shares:
The ADRs and local shares become convertible on July 29.
Should open the door for arbitrage and likely compress the ADR premium. Maybe lifting Korean shares or pressuring US shares.
2.5% currently is the US ADR stock, so an additional 22.5% can be converted.
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@zentXBT @AlvinHu37179959 @aleabitoreddit Yeah Korea Securities Depository shows availability here:
ksd.or.kr/en/resource-ce…
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@AlvinHu37179959 @aleabitoreddit Show me where it’s capped? F-6 shows 1.78billion ADSs authorized with only 10% used for the initial IPO so far
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@syl_52 @shitcoin_maxxi @aleabitoreddit Does anyone know how to interpret the conversion availability from Korea Securities Depository?
ksd.or.kr/en/resource-ce…
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@shitcoin_maxxi @aleabitoreddit SKHY get over-shorted into 29th because people are too optimistic about either getting the conversion or the premium decreasing. Then in practice, handful of funds get all the conversions and most folks are left with short SKHY shares with extremely elevated borrow rate
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Things I do not understand
- Venmoing money back & forth in a marriage
- Taking a HELOC to do home renovations
- Buying a house without running a buy vs rent calculation
- Complaining about lines at Disneyland and airport lounges. You are the line. If they reduced the lines, you’d be priced out
- Driving 10 minutes to save 10 cents on gas
- Working for 40 years without knowing how much money you need for retirement
- Calling yourself “middle class” when you have millions of dollars in net worth
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@NathanJRobinson Nathan again proves unfamiliar with the idea of journalism as an act whose goal is objective reporting
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lol the Wall Street Journal sent one of its vicious op-ed writers to DSA social events to smear them and they came back reporting DSA were all "charming, funny, and friendly" and that there is no way corporate Democrats can compete with socialists' offer of fun and friendship
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@JohnHCochrane If a private company wanted to develop nuclear bombs as an alternative to dynamite for mining purposes, would you be ok with that?
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Those guardrails are property rights, rule of law, limited government, not self-appointed aristocrats who want to be "policy-makers" making up grandiose plans.
Bryan Caplan@bryan_caplan
I oppose guardrails for awesome new technologies. Instead, I favor guardrails for the people who build guardrails for awesome new technologies. They're the ones with a terrible track record of derailing progress.
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@MarkosAAIG I’m long a ton of $000660 and short a ton of $skhy with an overall slight short tilt
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@ZFlawles1s Kalshi and prediction markets still have him as a 2:1 favorite (albeit down from 5:1 favorite). Prediction markets incorporate polling and have real money at stake with a ton of participants
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someone give me some reassurance on abdul in the primary because im dooming pretty hard right now
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@paulnovosad @QuaintTransfer ok whatever this would never happen at uchicago
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Tour guide at elite college:
> I'm really bad at math
> We have quirky clubs! Like one where you take naps!
> I'm taking a class where we only watch Disney movies
Guide at mid-tier engineering school:
> this is our team’s drone swarm, we have a DARPA competition next month
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@actsmaniac You likely don’t experience the structural violence of capitalism because of your material conditions and so you consider it fake
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problems I consider fake:
- The structural violence of late-stage capitalism
problems I consider real:
- 9 years to get a building permit in Berlin
- how new nuclear energy is almost impossible in the US
- a 15 years of legal gridlock to build one runway in London
- a 10-year bureaucratic cycle to approve a single new drug
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@ryanodonnellpa Every 1 in 5 times, the 80% prediction markets favorite will lose. It doesn’t invalidate the ex ante odds
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pReDiCtIoN MaRkeTs ArE ThE NeW PoLLiNg
Kalshi Politics@KalshiPolitics
NEW ALL-TIME HIGH: Adriano Espaillat has an 80% chance to win the NY-13 Democratic primary
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@blindey Buddy, nobody is ignorant of that. They rushed to renovate main street to make it more walkable than it was because, understandably, they didn't want to send a bunch of global tourists into the tunnels. And they're really excited about it.
x.com/VisitHouston/s…
Houston@VisitHouston
ICYMI: Downtown Houston celebrated the opening of Main Street Promenade yesterday! 🎉 The new gathering space was filled with food, entertainment, and community as Houstonians came together to mark an exciting new chapter for downtown 🤩🔥 #HoustonTx 🎥 @downtownhouston
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Houston tried to panic build a walkable downtown but other than that lol
Dee Macé@frmarcellinus
The fact that the US didn't have to panic-build stadiums and other facilities for the world cup because the amenities are just there, and have always been there, still baffles me. No country comes close ngl.
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@2_dang @0xCheshire If you buy S&P future at close and sell at open, the fee is 0.006% total.
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@0xCheshire 我回测标普500的结果是这样，buy and hold总是最大收益。只隔夜优于day only，但是考虑到交易成本，只隔夜收益要大打折扣。回测结果如下图。
结论：buy and hold是最优策略。
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看见一个很离谱的论文……
如果你每天在收盘时买入美光科技，在第二天开盘时立刻卖出，几十年来会获得高达 138,330,342% 的收益。
但如果每天开盘买入，当天收盘时卖出，你的投资最终会几乎全部亏损-99.92%。
作者表示，这一切都是既得利益者的阴谋，所有市场都一样。
是的，包括咱们大 A。
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@DanielMike98890 Straight couples make gay kids. Happy Pride!
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Pride month is so defeated. Just proposed her & she said yes💍
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