CXMT shares surge 466% in Shanghai debut, handing Hefei a $148bn windfall
The Chinese memory-chip maker briefly became China's most valuable listed company, while the city of Hefei's early investment delivered paper gains of 5,000 per cent.
The debut
CXMT shares closed at Rmb49 on Monday, 466 per cent above their Rmb8.66 IPO price, after touching an intraday market capitalisation of Rmb3.7tn ($547bn). That briefly eclipsed Hong Kong-listed Tencent as China's most valuable company. The listing on Shanghai's Star Market raised $8.5bn from the sale of 6.7bn shares, with an option to sell an additional 1bn shares that could lift total proceeds towards $9.8bn. It was the largest mainland Chinese IPO since Agricultural Bank of China in 2010.
We knew it was going to be a big IPO. Still, it's surprising how people have been so enthusiastic.
Hefei's windfall
The surge handed extraordinary paper gains to the city of Hefei, capital of Anhui province. Two municipal investment funds, Qinghui Power and Changxin Integrated, together hold a 30 per cent stake now worth close to Rmb1tn ($148bn). They invested Rmb13bn and Rmb6.7bn respectively at Rmb1 a share in a March 2023 funding round, meaning their holdings have appreciated roughly 50-fold in three years. Neither fund sold into the IPO.
Hefei at the municipal level and Anhui province have been quite remarkable in terms of their experimentation using local state-owned capital to nurture innovation in strategic industries and play a VC role.
Government funds play a "crucial role as anchor investors and catalysts in this ecosystem", said Shihao Li, a strategist at Citic CLSA. China's national semiconductor "Big Fund" owns a further 7.9 per cent stake.
- IPO price per share
- 8.66 Rmb
- First-day close per share
- 49 Rmb
- Intraday market cap (tn)
- 3.7 Rmb
- Hefei stake value (tn)
- 1 Rmb
Retail frenzy and market fallout
The retail tranche was 212 times oversubscribed, drawing 9.4 million purchase orders worth Rmb7.07tn, roughly ten times the retail orders seen during SpaceX's record IPO, according to Bloomberg. The stampede into CXMT stoked fears that money was being drained from other Chinese equities. The CSI 300 and Shanghai Composite indices each lost more than 6 per cent in July, while the Star 200 technology index plunged 30 per cent. State-backed funds had already been intervening to limit a broader sell-off that has erased more than $1.5tn from Chinese markets in recent weeks.
China's chip ambitions
CXMT is the world's fourth-largest maker of DRAM memory chips, behind SK Hynix, Samsung Electronics and Micron, with an 8 per cent market share according to Counterpoint. It is China's largest domestic producer and a centrepiece of Beijing's drive to reduce reliance on foreign semiconductor suppliers. Chief executive Zhu Yiming said ahead of the listing that proceeds would be directed chiefly into research and development and expanding production capacity, and that the company aimed to contribute to the broader Chinese semiconductor ecosystem.
A divided reception
Not everyone viewed the first-day pop as a success. Some commentators contrasted the chaotic surge with the orderly 20 per cent gain SpaceX notched in its June debut, arguing that extreme underpricing and a tiny free float distorted the outcome. Only about a tenth of CXMT's post-IPO share capital was sold, and Chinese regulators routinely tolerate cheap listings; chip-testing firm Semight Instruments rose nearly 900 per cent on its debut earlier this year and has climbed further since. Yet CXMT's home-market scarcity and its role in an AI-driven memory boom give it structural demand that, for now, keeps the story alive.
