Chinese memory chipmaker ChangXin Memory Technologies (CXMT) closed at 49 yuan (about 7.22 U.S. dollars) on its Shanghai STAR Market debut Monday, triggering broad-based gains across Chinese shares with major indices all up significantly, said an analyst.
Most sectors on China's stock market climbed on Monday, with the benchmark Shanghai Composite Index up 1.15 percent to 3,858.25 points, the Shenzhen Component Index closing 2.72 percent higher at 14,148.73 points, and the ChiNext Index gaining 3.16 percent to close at 3,590.79 points.
"CXMT dominated the headlines today, and its debut gave a considerable lift to sentiment-improving risk appetite after a couple of lackluster weeks. The gains were also extremely broad-based -- more than 5,000 mainland-listed stocks advanced on Monday, while we saw only a few hundred declining. Building materials, batteries, pharmaceuticals, consumer-related stocks, all of those were among the stronger performers. Now, part of that may be because CXMT had created a significant liquidity overhang ahead of its listing [with] investors raising cash or holding back from buying other shares as they prepared for this debut. But once the market successfully absorbed that enormous new listing, some of that sidelined money appears to have returned to other stocks," said Timothy Pope, a market analyst for China Global Television Network (CGTN).
The share price of CXMT rose 465.82 percent on Monday from its IPO price of 8.66 yuan, with full-day turnover surpassing 140 billion yuan.
The stock ended its first trading day with a market capitalization of over 3.2 trillion yuan, cementing its position as the largest listed company by market value on the A-share market.
The blockbuster debut caps a historic IPO run with expected total proceeds surpassing 66 billion yuan, making it the largest-ever IPO in China's sci-tech innovation board.
"But the CXMT debut itself was astonishing. We use words like 'surge' all the time and on days like this, I regret that, because it leaves me sort of without a significantly dramatic word to describe a company gaining almost 500 percent and becoming the Chinese mainland's most valuable listed company on its first day of trade. CXMT closed 465.8 percent higher, giving it a market valuation of around 3.3 trillion yuan. Now, that does come with an important caveat, however, only 6.73 percent of the company's shares were freely tradable today. And with different groups of shares locked up for periods ranging from six months to three years, it will be some time before the market faces sort of a meaningful test of that enormous new valuation," said Pope.
He also noted that the Chinese share markets are going to witness a busy week as a series of signals are set to be released, potentially affecting investors' trade decisions both in short and medium terms.
"Looking ahead, for the rest of the week, it's going to be a busy one. We have got a two-day industry meeting on solid-state-battery standards taking place today and tomorrow [and] the official July PMI figures on Friday. And, of course, the major event of the week will be the communique from the Politburo's expected July economic meeting. Investors will certainly be combing through that document for signals on property, liquidity, consumption and broader economic support and the policy direction that is likely to guide trading over both the short and medium term," he said.
CXMT's blockbuster debut triggers wide gains across Chinese stock markets: analyst
