On August 20, in the wake of SK Hynix’s U.S. listing and the subsequent slump in AI-related stocks, the cost of financing leveraged investments in SK Hynix’s Korean stocks for international investors has dropped significantly in recent weeks, with rates now roughly half of their previous levels. Insiders reveal that major banks, including Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase, are now providing clients with access to SK Hynix’s Korean stocks via swap transactions. These are offered at rates ranging from 150 to 300 basis points above the Secured Overnight Financing Rate (SOFR). In contrast, as recently as mid-June, clients initiating new or renewing swap contracts for SK Hynix faced financing rates exceeding 1,000 basis points above SOFR. Since May 1, SOFR has hovered between 3.50% and 3.69%.

Previously buoyed by the AI boom, SK Hynix’s Korean stocks soared, multiplying 11-fold over the 12 months leading up to June 22. To manage limited quotas and keep pace with surging trading volumes, banks had imposed exorbitant financing rates and, in some instances, outright declined client requests. As market optimism reached fever pitch, banks became wary of over-concentration in such stocks within their portfolios, prompting a spike in repo market financing costs. However, sources indicate that some banks, which had previously turned away clients, are now actively pursuing new business opportunities.