SK Hynix Q3 2026 Earnings Hit Record High Amid Surge in AI Storage Demand

BIT Securities × Southern Asset Management Joint Offering

When investors are optimistic about a company’s growth prospects, the most direct approach is to buy its stock. But if they’re bullish on an entire industry or supply chain, must they bet on just one company?

Taking the AI storage industry as an example, as the construction of AI data centers continues to advance, storage products such as High Bandwidth Memory (HBM) have garnered significant market attention. SK Hynix, a leading supplier in the HBM sector, recently reported record-breaking results for the third quarter of 2026: quarterly revenue reached KRW 10.462 trillion, with an operating profit of KRW 8.333 trillion, resulting in an operating margin of approximately 80%.

However, believing in an industry does not mean you can accurately predict the performance of every company within it. Even if a company has strong fundamentals, its stock price may still be influenced by factors such as valuation, market expectations, industry cycles, and macroeconomic conditions.

In addition to directly investing in individual stocks, investors can participate in the market through exchange-traded funds (ETFs).

Investing in individual stocks: Focus on the performance of a single company.

Buying SK Hynix stock means investors directly assume the risks associated with the company’s operational performance, competitive landscape, financial results, and changes in market valuation. If the company’s performance exceeds expectations, the stock price may benefit; however, if demand for its products, profit expectations, or market sentiment shift, the stock price could experience significant volatility.

The advantage of investing in individual stocks is clear targeting, allowing you to focus on the growth opportunities of a specific company; conversely, the investment outcome depends more heavily on your assessment of that company.

Invest in ETFs: Gain market exposure through a basket of assets or a specific strategy.

An ETF is a fund traded on an exchange. ETFs vary in their investment scope and strategies: some track broad market indices, others focus on specific industries, and some track individual stocks using leveraged strategies.

For investors who want to participate in a particular market or industry without concentrating their investments in a single company, ETFs that track multiple stocks can help diversify away company-specific risk and reduce the workload of individually selecting and managing multiple stocks.

What are the characteristics of ETFs?

Diversify away company-specific risk: For ETFs holding multiple stocks, the negative performance of a single component stock typically does not impact the entire portfolio as severely as holding that stock directly. However, diversification cannot eliminate market risk.

Easier exposure to an industry or market: Investors can gain exposure to a basket of stocks through index ETFs without having to buy each component stock individually.

More investment strategy options: The market offers traditional index ETFs, sector ETFs, leveraged products, and inverse ETFs, allowing investors to explore different tools based on their goals and risk tolerance.

The trading method is relatively straightforward: ETFs can typically be bought and sold on exchanges like stocks. However, actual trading costs, liquidity, bid-ask spreads, and fund fees still need to be compared individually.

Note that ETFs are not necessarily lower risk than individual stocks. For example, an ETF tracking a single stock remains highly dependent on that stock’s performance; an ETF focused on a single industry may also experience significant volatility due to high industry concentration. Leveraged products involve additional strategy-related risks.

Therefore, choosing an ETF does not necessarily mean it is safer or easier to profit from; the key is to understand the product structure and determine whether it aligns with your investment goals.

Stocks vs. ETFs

Amid ongoing interest in the AI storage industry, investors can compare different investment tools based on the market exposure they seek.

Option 1: Direct investment in SK Hynix

Suitable for investors who wish to focus on SK Hynix’s own operational performance and are willing to bear the risks associated with single-company volatility.

SK Hynix's latest quarterly performance was strong, reflecting the boost to the company's business from AI storage demand. However, investors should still consider whether the market has already priced in growth expectations, as well as the potential impact of future competitive dynamics, capital expenditures, and industry cycles.

Strong company performance does not necessarily mean the stock price will continue to rise.

Option 2: Gain exposure through a South Korean market index ETF

For example, 3121.HK, the Southern DWS KOSPI 200 ETF, tracks the South Korean KOSPI 200 Index, providing investors with exposure to the large-cap segment of the South Korean stock market. Listed on the Hong Kong Stock Exchange on June 18, 2026, the fund employs a full replication strategy by directly holding the index’s constituent stocks and has a management fee of 0.99%.

Compared to holding SK Hynix directly, an index ETF covers multiple companies, reducing dependence on a single firm. For investors bullish on the overall Korean market but unwilling to bet entirely on one company, this is a strategy worth exploring.

However, an index ETF does not eliminate concentration risk. The KOSPI 200 index is heavily concentrated in Samsung Electronics and SK Hynix, both of which operate in the semiconductor industry. According to the product summary of 3121, their combined weight may exceed 50% of the fund’s net asset value. This means that holding 3121 still provides significant exposure to memory semiconductors, making it more suitable for investors who are bullish on Korea’s leading semiconductor companies but prefer not to bet on a single firm. Investors should review the latest holdings and weights on the product’s website to understand exactly what they are investing in.

Option 3: Amplify daily exposure using single-asset leveraged products

For investors bullish on a particular company, in addition to buying the stock directly, they can also explore leveraged products that track a single stock.

For example, the 7709.HK Southern DWS SK Hynix Daily Leveraged (up to 2x) Product provides leveraged exposure to SK Hynix. Unlike traditional index ETFs, which diversify risk by holding a basket of stocks, this product amplifies the daily price movements of the underlying stock through leverage.

Compared to holding stocks directly, these products have several distinctive features:

• Easy trading: Buy and sell through your Hong Kong stock account, settle in Hong Kong dollars, with a lot size of 100 units—no separate Korea market account required.
• Losses are limited to your initial investment: Unlike margin trading, purchasing this product does not require margin calls, and your maximum loss is limited to your invested principal.
• Scale and Trading Volume: As of early October 2026, the assets under management of 7709 amounted to approximately $4.5 billion, making it the largest of its kind in both Hong Kong and the U.S., with relatively active trading volume.

At the same time, before using it, you need to understand how it works:

• Daily Trading Instrument: This product is designed solely to track daily leverage performance; both the issuer and the Hong Kong Securities and Futures Commission explicitly warn that such products are not intended for holding periods exceeding one day.
• Holding Cost: The management fee is 1.6%, with an estimated annual recurring expense ratio of approximately 2.00%, excluding swap fees. According to the product summary, the longer the holding period, the more pronounced the cost impact.
• Volatility and Drawdown: Leverage amplifies both gains and losses. For example, from late June to the end of July this year, SK Hynix fell approximately 49% from its peak; during the same period, the net asset value of 7709 experienced a drawdown of over 80%. After a drawdown, the product’s net value requires a larger percentage gain to return to its original level. Before investing, assess your maximum tolerable loss under the worst-case scenario.

Investors should note that the daily leverage target does not equal a fixed multiple of the long-term cumulative return. In conditions of sustained market volatility, the compounding effect may cause the product’s performance to differ significantly from the cumulative price movement of the underlying stock over the same period. Therefore, in addition to monitoring the fundamental performance of the underlying company, investors must fully understand the product’s mechanics, holding period, and potential drawdowns.

Comparison of Three Methods

The table below presents the three methods together for easy comparison of their differences:

Note: Fee and weight information is sourced from product summaries and issuer announcements and is subject to change; please refer to the latest information on the product website.

Before selecting individual stocks or ETFs, you can ask yourself a few questions:

• Am I betting on a single company, or on an entire industry or market? If your focus is on one company, individual stocks may offer more direct exposure; if you’re seeking broad exposure to a basket of stocks, consider researching the corresponding index or industry ETF.
• How long do I plan to hold? Traditional index ETFs and daily leveraged products have different design objectives and should not be evaluated using the same holding strategy. Daily leveraged products are not designed to be held for more than one day.
• How much volatility and drawdown can I withstand? You should not only focus on potential gains during upward movements, but also consider possible losses when the market moves in the opposite direction.
• What are the actual trading conditions for the product? Compare management fees, bid-ask spreads, trading volume, tracking performance, and product terms—do not base your decision solely on recent price movements.

Common misconceptions

• Holding too many similar ETFs: Buying a large number of ETFs with closely related themes may result in highly overlapping positions, effectively resembling holding just one broad-market ETF, while increasing management complexity.
• Looking only at the name or popular themes: ETFs with the same theme, such as “South Korea” or “Semiconductors,” may have significantly different underlying holdings, weights, and rules—review the holdings and product summary before purchasing.
• Looking only at recent gains: Products with the highest recent price increases do not necessarily align with your investment goals or holding period.
• Treat daily leveraged products like regular ETFs: Daily leveraged products are not designed to be held for more than one day and should not be held in the same way as traditional index ETFs.

Practical注意事项

• Compare similar products: If multiple products share the same theme, compare their size, fees, tracking error, and trading volume.
• Monitor premium and discount: An ETF's trading price may deviate from its net asset value. Products investing in overseas markets are more likely to experience such deviations when the underlying markets are closed or after trading hours.
• Pay attention to trading hours and order types: Prices during the pre-market auction session for Hong Kong stocks may fluctuate significantly; consider using limit orders to control your execution price.
• Be aware of exchange rate impacts: The performance of ETFs investing in overseas assets can be affected by fluctuations in the relevant currencies.

Summary

Individual stocks and ETFs are not simply better or worse than each other; they serve different investment goals and risk profiles.

Investing in individual stocks more directly reflects the performance of a single company; holding an ETF with multiple stocks can help investors gain broader market exposure. Specialized products such as leveraged ETFs involve additional strategies and risks and should not be confused with traditional index ETFs.

Taking the AI storage industry as an example, whether investors choose to directly invest in SK Hynix or analyze South Korean market index ETFs or single-stock leveraged ETFs, they should first understand the product structure, risks, and costs before determining whether it aligns with their investment goals.

Publisher and Important Disclaimer

Publisher: This article is jointly produced by BIT Securities and Southern Asset Management.

BIT Securities: A U.S. and Hong Kong stock trading platform under the BIT (formerly Matrixport) group, operated by its wholly owned subsidiary Matrix Gelephu Pte. Ltd. (holder of a financial services license from Bhutan’s Special Economic Zone), with Hong Kong stock services provided through a licensed Hong Kong SFC partner broker.

Southern Asset Management: Hong Kong's largest ETF issuer and the first subsidiary established overseas by a mainland China public fund company, specializing in the issuance and management of ETFs and leveraged/inverse products.

Source: The product information for 3121 and 7709 referenced in this article is provided by Asset Management Corporation of Southern China. Fee and weight information is derived from the product fact sheets and issuer announcements and is subject to change; please refer to the latest information on the product website.

Risk Disclaimer: This article is provided solely for general market information and investor education and does not constitute investment advice or a recommendation to buy or sell any securities or funds. Investing in securities and ETFs may result in the loss of principal; leveraged and inverse ETFs carry even higher risks, and investors should read the relevant product documentation and fully understand the risks before investing.