SHANGHAI: China stocks gained on Monday as memory chipmaker CXMT Corp surged about 500% in its Shanghai debut, reviving sentiment in a stock market buckling under a tech selloff.
The listing catapulted CXMT’s market value to more than 3 trillion yuan (US$443.26 billion), creating the biggest China-listed company by market cap, dwarfing Industrial and Commercial Bank of China.
China’s large-cap CSI300 Index and the Shanghai Composite Index both gained around 0.5% in mid-morning trading, reversing early losses, as investors overcame fears that CXMT’s mega-listing could drain market liquidity.
The steady market performance could offer some comfort to Chinese regulators, who have rolled out a raft of measures to stem a rout that has wiped out more than US$1.5 trillion in market value this month.
China’s benchmark stock index has shed more than 6% this month, with selling more intense in small-caps and tech shares amid fresh fighting in the Iran war, stock deleveraging in South Korea, and a stampede for the exit by local quant funds.
In face of CXMT’s debut, “the market reaction has been fairly calm,” said Zeng Wenkai, chief investment officer at Hong Kong-based Shengqi Capital.
“With CXMT’s successful listing now behind us, the broader tech sector will need a new narrative to drive it forward.”
Chipmaking and semiconductor stocks fell as fund managers reposition for CXMT shares.
But an index tracking chipmaking materials and equipment jumped on bets CXMT’s IPO will fund capacity expansion and benefit upstream suppliers.
“Over the longer term, we expect AI-related investment in China to keep rising, both from big tech firms, and in the broader infrastructure supporting the sector,” UBS analyst Xiong Wei said.
“We don’t think there’s a bubble in China’s AI sector.”
