This is market analysis, not investment advice.
If you hold EWY (the iShares MSCI South Korea ETF), you own SK Hynix twice. Once directly — the chipmaker is about 20% of the fund — and once more through SK Square, a holding company that owns 20.5% of SK Hynix and makes up about 3.4% of EWY. So far that sounds like “SK Square is just SK Hynix at a discount.” Not quite. The second door carries two things the first door does not: a holding-company discount that can narrow, and forces actively pushing it to narrow — an activist fund, and the company’s own buyback-and-cancellation program: buying its own shares and then erasing them, which shrinks the share count for good. Friday’s session in Seoul drew the difference in one line: SK Hynix closed up 3.20% at ₩1,647,000, and SK Square closed up 6.12% at ₩1,041,000 — roughly 1.9 times the move. Same chip, different vehicle.
For EWY holders, in two lines. (1) Your fund holds SK Hynix by two routes — about 20.25% directly, and once more through SK Square at about 3.44% (iShares holdings as of August 6, before the August MSCI index reshuffle took effect). (2) The two routes move in the same direction at different speeds: the SK Square route carries a discount that amplifies moves both ways, plus separate catalysts — activism and cancellations — working on that discount.
1. Door one — SK Hynix directly: the pure memory bet
The first door is simple. Buy SK Hynix — directly or through EWY — and you own the memory and HBM cycle itself. The price moves nearly one-for-one with the chip business, with no structural discount or premium attached. (The US-listed ADR, SKHY on Nasdaq, has its own premium problem — a separate story we covered in August.) On Friday SK Hynix closed at ₩1,647,000 — about $1,203; dollar figures in this piece use the September 2 Seoul close of ₩1,368.7, the latest rate confirmed for it — up 3.20% on the day, per Korean press reports. The KOSPI rose 1.64% to 6,687.21 the same day on recovering semiconductor sentiment, and the index heavyweight outran it. Door one’s character: the exposure is the chip, nothing more and nothing less.
2. Door two — SK Square: a discounted holding company with catalysts attached
The second door has one more layer. SK Square is the largest shareholder of SK Hynix with a 20.5% stake, and that stake is most of the company’s net asset value — its NAV, the market value of everything it holds. In substance, SK Square is a basket that is mostly SK Hynix; we walked through that structure in an earlier piece. The key fact is that the basket trades well below the value of what it holds — the holding-company discount. And the gap has been closing: per Korean press and brokerage estimates (Hankyung and others), the NAV discount ran 65.1% in 2024, 51.3% in 2025, and 46.4% as of the first quarter of 2026, and the company has set a target of below 30% by 2028. So whoever buys door two is stacking a second bet on top of the chip bet: will a 46% discount keep narrowing? The checkpoint is dated — each quarterly round of NAV-discount estimates, and each cancellation filing. Those, not a forecast, tell you whether the gap is still closing.
Two forces are pushing in that direction. First, activism: Palliser Capital, a UK-based activist fund, accumulated more than 1% of SK Square over two years and entered the top-ten shareholder list in October 2024, per press reports — we could not confirm a public letter or primary filing this session, and we do not assert specific demands. Second, the company’s own program: ₩100 billion (about $73 million) of stock bought in September 2025 and canceled that November, another ₩100 billion bought in February 2026, and 34,388 shares — about ₩43 billion ($31 million) — canceled in July 2026, under a three-year policy of returning at least 30% of dividend income plus part of investment gains (the cancellations are company filings; the surrounding context is press reporting). We do not claim the activist and the buybacks are causally linked; what is confirmed is that both aim at the same gap.
3. What Friday showed — the discount doing the work
Door one: SK Hynix (KRX: 000660) closed at ₩1,647,000 (about $1,203), up 3.20%. Door two: SK Square (KRX: 402340) closed at ₩1,041,000 (about $760), up 6.12%. In the same up-market, door two moved about 1.9 times as far.
The mechanism is a second lever: when SK Hynix rises, SK Square’s net asset value rises — and on top of that, the expectation that the discount will narrow gives the price another push. The catch is that the lever works both ways. On a day the chip falls, the discount can widen again and door two falls harder — recall September 2, when the KOSPI dropped 3.99% in a session.
How much does this matter inside your fund? By an approximate calculation: if the discount narrowed from 46% to the company’s 30% target with the NAV unchanged, SK Square’s price would rise about 30% — worth roughly one percentage point of EWY at its 3.44% weight. Real, but a seasoning rather than the meal.
4. What it means for Korea — the discount layer you can only see here
Without SK Square, a US investor cannot see that a force called the Korean holding-company discount is at work inside EWY. Companies trading below the value of their holdings exist in every market, but Korea’s version carries an extra layer — the governance of its chaebol, Korea’s family-controlled conglomerate groups, plus the government’s value-up campaign — which makes the discounts unusually wide and makes them standing targets for foreign activists. SK Square is the cleanest specimen there is: its NAV is essentially one asset, so the question “is the gap narrowing?” reads without noise. Door one is a chip story. Door two is a chip-plus-Korean-governance story. EWY opens both — mostly door one, at about 20%, and a sliver of door two, at about 3.4%.
5. The US anchor — and how to open each door
The picture is not foreign. Companies worth less than what they hold are familiar in the US — discounted closed-end funds, the old Yahoo–Alibaba stub (a listed company valued mostly for a stake it held), SoftBank trading below its stakes. Not a perfect parallel: Korea’s discount sits on a structural layer of chaebol governance and value-up policy, runs wider, and is the explicit target of activists — a different context.
The exposure ladder: EWY (NYSE Arca) opens both doors at once — though door two’s effect is diluted at 3.4% of the fund. SKHY (Nasdaq) opens door one alone, with its own ADR-premium issue. Door two alone has no clean US route: SK Square (KRX: 402340) has no US listing you can rely on, so it takes a broker with Korean market access, such as Interactive Brokers. Note the irony — the door with the catalysts attached is the harder one for a US investor to walk through. That is the honest answer. And for the record, this week’s SK group restructuring happened at SK Innovation and SK Telecom; it touched neither SK Square nor SK Hynix.
Mr. Gat: “One door is the chip. The other is the chip, minus a discount, plus someone fighting to close it. Today the second door moved almost twice as fast — that’s the discount doing the work, in both directions.”
The wrap
SK Square is not just cheaper SK Hynix. It is an SK Hynix bet with a second bet stacked on top — that a 46% holding-company discount, pushed by an activist and by the company’s own cancellations, keeps narrowing. Friday showed the upside of that lever at 1.9 times the chip’s move. The same lever works downhill. If you hold EWY, you already own both doors; it is worth knowing which one is doing what.
FAQ
Is buying SK Square just buying cheap SK Hynix?
No. Most of the exposure is SK Hynix, but a separate bet rides on top: whether the roughly 46% holding-company discount narrows (it rose faster than the chip on Friday) or widens (it would fall harder). The discount figures are press and brokerage estimates.
What does Palliser want?
Palliser Capital built over 1% of SK Square and entered the top-ten shareholder list in October 2024, per press reports. Funds in this position typically push to narrow the discount — buybacks, cancellations, realizing asset value — but we could not confirm a public letter or specific demands from primary sources this session.
Can I buy SK Square in the US?
Not cleanly. It trades on the KRX under 402340 with no US listing you can rely on; the routes are EWY (about 3.4% indirect) or direct Korean-market access through a broker like IBKR.
Does this week’s SK group restructuring affect SK Square?
No. The three filings were at SK Innovation and SK Telecom; SK Square’s core asset, its SK Hynix stake, is unchanged.
Sources
September 4 closes per Korean press (Money Today, Business Post, JoongAng Economy News and others). NAV discount trajectory and the 2028 target — Hankyung, Newsquest and other coverage. SK Hynix stake of 20.5% — Invest Chosun and others. Palliser — Financial News, Ilyo Shinmun (October 2024). Buyback and cancellation filings — Asiae, Newsis. EWY weights — iShares holdings as of August 6, 2026. FX — September 2 Seoul close, ₩1,368.7.
This is market analysis, not investment advice.