IPO market becoming favored strategy for wealth management funds

China's wealth management funds are racing to capitalize on the booming IPO market, rapidly expanding allocations to new-share subscription strategies as they seek higher returns and stronger exposure to the country's emerging growth sectors.

Against a backdrop of narrowing fixed-income yields, the "fixed income plus IPO subscription" model is quickly becoming a favored strategy for boosting product performance while channeling capital into new quality productive forces.

Zeng Gang, deputy director-general of the National Institution for Finance and Development, said that banks' wealth management subsidiaries have extended their IPO subscription activities from participating in offline A-share allocations into diversified areas such as Hong Kong IPO cornerstone investments and private placements. Investments are highly concentrated in technology sectors, including semiconductors, artificial intelligence, and biomedicine.

Data from the Shenzhen Stock Exchange shows that, as of May 18, three major wealth management subsidiaries of banks — BNB Wealth Management, CIB Wealth Management, and Everbright Wealth Management — had made a total of 239 IPO subscription quotations this year.

Xue Hongyan, a special researcher at Jiangsu Su Merchants Bank, said that, in recent years, banks' wealth management subsidiaries' IPO subscription activities have been characterized by explosive growth in participation frequency, diversified channels, and a concentration on hard-tech sectors.

As of the market open on April 28, ICBC Wealth Management had participated in 16 Hong Kong IPOs this year, achieving a 100 percent success rate in securing allocations and a weighted average return on investment exceeding 100 percent. Among these, the company played a significant role as a cornerstone investor in six key projects, covering core sectors of national strategic importance, such as semiconductors, new energy, and high-end manufacturing.

CMB Wealth Management said on May 9 that it had recently participated in subscriptions for high-quality new listings spanning frontier sectors, such as green manufacturing, intelligent manufacturing, spatial intelligence, semiconductors, and optical computing power via its Hong Kong IPO subscription strategy. After listing, the best-performing stock among these projects surged by as much as 384 percent on its first trading day.

The company announced its plan to launch "Hong Kong IPO subscription plus market-neutral strategy" products in May and June to further tap the value of IPO subscriptions in the Hong Kong market.

Meanwhile, subscriptions for new listings on the Beijing Stock Exchange have also become a means for many wealth management subsidiaries to boost product returns.

The growing enthusiasm among banks' wealth management subsidiaries for IPO subscriptions is being driven by pressure on returns. In 2025, the average yield on wealth management products across the market fell below 2 percent. As the potential for returns on traditional fixed-income assets continued to shrink, institutions were compelled to seek breakthroughs through higher-yield strategies, and IPO subscriptions offered a path with relatively controllable risk and a higher degree of certainty regarding excess returns, Zeng said.

Lou Feipeng, a researcher at Postal Savings Bank of China, said IPO subscriptions guide capital toward high-quality listed companies and ultimately channel funds into the research, development and production activities of real-economy enterprises.

Since the beginning of the year, many wealth management subsidiaries have launched IPO subscription strategy products. Bank of Ningbo announced on its official WeChat account on May 8 that the number of wealth management products offered by BNB Wealth Management that participate in offline IPO subscriptions on the Shanghai and Shenzhen stock exchanges had exceeded 10, supporting the development of new quality productive forces.

Financial analysts at Guosen Securities said that, in the long run, the wealth management industry is transitioning from pure fixed income toward "fixed income plus" and multi-asset allocation models, and embedding IPO subscription strategies will help improve product return flexibility.

CMB Wealth Management said that ordinary investors can now participate in high-quality assets that would otherwise be out of reach at relatively low thresholds and share in the growth dividends of new-economy companies.

Additionally, China has also provided policy support for banks' wealth management subsidiaries to participate in IPO subscriptions. On March 28, 2025, the China Securities Regulatory Commission explicitly stated that bank wealth management products would be included in the scope of priority allocation for IPOs. This marks the formal elevation of banks' wealth management subsidiaries to Category A investors, granting them the same allocation treatment as mutual funds under the criteria for new-share subscriptions.

Dong Ximiao, chief economist at Merchants Union Consumer Finance and deputy director of the Shanghai Institution for Finance and Development, said that the Category A investor status grants wealth management subsidiaries greater flexibility in asset allocation, driving the expansion of "fixed income plus" and equity-related products. This not only optimizes the structure of wealth management products, but also enhances the competitive advantage of bank WMPs within the asset management industry.

"With the opening of the IPO subscription window, the issuance of hybrid and equity-linked wealth management products is expected to increase in the future, making the product lineup more diverse to better meet the varying risk appetites and investment needs of different investors," Dong said.