ChangXin Memory Technologies' planned Shanghai STAR Market listing is set to become China’s largest IPO in four years and the biggest non-state-owned offering since 2020, according to a Bank of America Securities note.
The memory chipmaker aims to raise approximately RMB29.5 billion through the offering, placing it among the largest equity fundraising deals in China’s recent history.
Bank of America reviewed 19 Chinese IPOs that raised over RMB10 billion in the past six years and found that large offerings generally generate strong returns for investors after listing.
79% of those IPOs were trading higher one week after debut, while 68% posted gains after one month. More than half delivered returns exceeding 50% within the first week, and nearly two-thirds rose more than 50% within a month.
The bank noted that large IPOs have had limited impact on broader market performance before listing, especially since China ended subscription fund freezing in 2016.
Historical data shows the Shanghai Composite Index and STAR50 Index recorded positive returns in over 60% of cases during the week leading up to major IPO launches.
However, market performance typically softens after large IPOs begin trading. The probability of positive one-week and one-month returns for major indexes falls to roughly 30% to 40% following large listings.
Bank of America suggests investors often rotate funds toward newly listed companies, creating short-term pressure on broader indexes.
Despite concerns, the bank believes current liquidity conditions should be sufficient to absorb the offering. Average daily turnover in China’s stock market rose to RMB3.2 trillion in May from RMB2.4 trillion in April, while margin financing balances increased to RMB2.9 trillion from RMB2.7 trillion.
Stronger trading activity and increased leverage indicate ample market liquidity ahead of the IPO.
ChangXin Memory’s listing is expected to be closely watched by investors as a gauge of demand for large-scale technology offerings and sentiment toward China’s semiconductor sector.
