Chinese memory chip giant CXMT’s $8.6 billion initial public offering drew strong interest from retail investors, with subscriptions exceeding the shares available by more than 200 times.
But the over-subscription rate of the mega IPO – Asia’s biggest so far this year – was much lower than most recent Chinese IPOs, reflecting investor caution amid a broad selloff in Chinese tech shares.
CXMT, or ChangXin Memory Technologies, said late on Thursday that its IPO was 243.93 times oversubscribed in the “online” retail tranche of the offering.
The final lot-winning rate was around 0.47% – representing an oversubscription rate of 212 times – after a share claw-back from shares offered to institutional investors.
Such a winning rate is the highest on China’s tech-focused STAR Market, where CXMT will be listed, according to the official Securities Times.
The previous record is roughly 0.3%, by Everdisplay Optronics.
This reflects growing caution toward tech shares, which have been increasingly volatile recently due to concerns over valuation and liquidity.
China’s STAR50 Index has slumped nearly 20% from its peak hit on July 1, as investors fear mega IPOs such as CXMT will sap market liquidity. Some expect its valuation to surge to multi-trillion yuan after listing.
In an apparent effort to pacify the market, the official Shanghai Securities Journal said in an article on Friday mega IPOs do not change the market’s original trajectory, and China’s market liquidity is ample.
“There’s no need to worry too much about CXMT’s IPO,” the newspaper said. “From a longer perspective … CXMT’s listing will be a ballast of the STAR Market, and allow investors to share the dividend of technology development.”
The Shanghai Stock Exchange holds a lot-drawing ceremony for CXMT’s offering on Friday.
Its listing in Shanghai is set for July 27, according to sources familiar with the matter.
Reuters
