Chinese memory chip producer gains 500 percent after major stock debut

Chinese memory chip maker CXMT experienced a spectacular debut on Shanghai's technology-focused STAR market, with its shares soaring as much as 535% during Monday's session before closing up 472%. The stock opened at 49.50 yuan ($7.30), a significant jump from its Initial Public Offering (IPO) price of 8.66 yuan.

This dramatic surge propelled CXMT's market capitalization to 3.1 trillion yuan, establishing it as the most valuable listed company in mainland China and the second-highest among Chinese firms, trailing only Hong Kong-listed Tencent. The company issued 6.688 billion shares, raising 57.9 billion yuan ($8.5 billion). This marks the largest public offering in mainland China since the Agricultural Bank of China's debut in 2010. An option for an additional 1 billion shares could further increase proceeds to nearly $10 billion.

"We knew this would be a big IPO. Nevertheless, it's surprising how enthusiastically people reacted," said Tilly Zhang, a technology and industrial policy analyst at Gavekal Dragonomics in Beijing. Investor demand for CXMT shares was exceptionally strong, with online subscriptions being oversubscribed 244 times. This led to a reallocation of shares from institutional to retail investors, resulting in a final allocation rate of just 0.4714% for individual investors.

Prominent strategic investors, including entities affiliated with Alibaba Cloud and electric vehicle maker Nio, each acquired shares worth approximately 158 million yuan. Alibaba Cloud and Alibaba (China) Network Technology already held about 4.97% of the company's shares prior to the IPO. CXMT's debut follows SK Hynix's $26 billion IPO in New York just two weeks prior. CXMT, or ChangXin Memory Technologies, designs and produces DRAM (Dynamic Random-Access Memory) chips, essential components for smartphones, PCs, servers, and cloud systems, which are currently experiencing high demand and occasional shortages.

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We knew this would be a big IPO. Nevertheless, it's surprising how enthusiastically people reacted.