[Stock Market] SK Hynix Designated as Investment Warning Issue | Background and Outlook of KRX System Improvements

[Stock Market Issue: SK Hynix Investment Warning Designation]

SK Hynix, the second-largest company by market cap in Korea, has unexpectedly been designated as an "Investment Warning Issue"—a label usually reserved for stocks subject to manipulation. This appears to be a farcical situation caused by the clash between the 2025 KOSPI bull market and past regulations. In this post, we analyze in detail the loopholes in the CFD Crisis Prevention Regulations that caused this incident and the institutional improvement plans proposed by the Korea Exchange (KRX).

SK Hynix Investment Warning Designation: Background and Outlook for System Improvement

1. What Happened? : The Humiliation of a Large Cap

On December 11, 2025, the Korea Exchange (KRX) designated SK Hynix as an Investment Warning Issue. It is highly unusual for a mega-cap blue-chip stock, ranked 2nd in market capitalization, to be subject to market warning measures rather than a small-cap theme stock on KOSDAQ.

Once designated as an Investment Warning Issue, investors face the following practical trading restrictions:

• 100% Entrustment Margin Requirement: Margin trading (buying on credit) is impossible; purchases can only be made within the scope of cash on hand.
• No Credit Loan Buying: Leveraged investing using loans from securities firms is completely blocked.
• Exclusion from Substitute Securities: The stock cannot be used as collateral to purchase other stocks.

In other words, this effectively forces a reduction in market liquidity. So, why was a perfectly sound blue-chip stock subjected to such sanctions?

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2. Cause Analysis : The Ghost of 2023, The CFD Crisis

The root cause of this incident traces back to the CFD (Contract for Difference) Stock Manipulation Crisis that occurred in April 2023. At that time, price manipulators (like the Ra Deok-yeon gang) used a method of slowly and steadily raising stock prices over a period of 1 to 3 years.

In response, financial authorities and the exchange included "long-term steady rises" in their surveillance targets, not just short-term spikes. The current designation criteria are as follows:

[Investment Warning Issue Criteria (Long-term Rise)]
1. A rise of 200% or more compared to the closing price 1 year ago
2. Renewing the highest price within the last 15 days
3. Meeting unhealthy conditions, such as high involvement of specific accounts or excessive buying weight of top accounts

The problem is the market environment of 2025. This year, the KOSPI index has surged over 71%. As the entire market entered a major bull run, it became not unusual for a leading stock like SK Hynix to rise 200% in a year. A contradiction has arisen where past "anti-manipulation rules" are criminalizing a "normal rally."

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3. The Problem : Limitations of Absolute Return Criteria

The biggest loophole in the current system is the absolute return criteria that do not account for market conditions (Beta).

Category	Bear/Sideways Market (2023)	Bull Market (Current 2025)
Meaning of 200% Rise	Suspicion of artificial manipulation (Excessive divergence from market)	Normal performance of leading stocks (Reflecting market rise)
Side Effects	High investor protection effect	Distortion of Blue-chip Supply/Demand Shrinking normal investor sentiment

In particular, it is nearly impossible for a small group to artificially double or triple the price of large-cap stocks worth tens or hundreds of trillions of won. Nevertheless, applying mechanical numbers to regulate large stocks like SK Hynix or SK Square is difficult to defend against criticism of administrative expediency.

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4. KRX Response : Initiating System Improvements

Fortunately, the Korea Exchange (KRX) has recognized the problem and announced immediate system improvements. According to press releases, there are two main directions for improvement:

1) Change from Absolute Return → Excess Return (Alpha)
Instead of simply asking "Did the price rise 200%?", the criteria will be based on "How much more did it rise compared to the market index (KOSPI)?" If the market rose 70%, even if an individual stock rose 200%, the gap is around 130%p, allowing for more flexible application.

2) Exception for Top Market Cap Stocks
This is a plan to exclude Large Cap stocks, where price manipulation is realistically difficult, from surveillance targets or apply relaxed criteria. This is a reasonable direction that aligns with global standards.

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5. Conclusion : Growing Pains Necessary for Change

This happening is interpreted as growing pains experienced as the Korean stock market breaks out of its long-standing box pattern and levels up. For SK Hynix holders, even if they consider it a badge of honor as a "Nationally Certified Soaring Stock," they will have to endure inconveniences such as restrictions on credit trading for the time being.

Financial authorities' regulations are always a beat slower than market changes. However, the fact that they quickly acknowledged the unreasonableness and began improvements this time is worthy of positive evaluation. Once the system is refined, it is expected to help large blue-chip stocks find their true value without supply and demand complications.

Key Summary:
- SK Hynix's investment warning designation is due to the mechanical application of past CFD crisis prevention measures.
- The cause is the 'Absolute Return' criteria failing to reflect the KOSPI surge.
- The exchange has promised system improvements such as introducing 'Excess Return vs. Market' criteria and 'Exceptions for Large Caps'.

The content of this blog is for reference only for investment judgment, and investment decisions must be made under the individual's own judgment and responsibility. Under no circumstances can the information in this blog be used as evidence of legal responsibility for investment results.