CXMT enters MSCI index in record 14 days

BEIJING — China's leading memory chipmaker, ChangXin Memory Technologies (CXMT), was officially added to the MSCI China All Shares Index on Monday, just two weeks after its blockbuster debut on Shanghai's STAR Market. This marks the latest sign of global investors' growing appetite for Chinese assets, especially in the hard-tech sector.

The inclusion took effect under the MSCI's fast-track rule for large IPOs. The global index provider announced CXMT's eligibility on July 28, one day after its listing, in line with its practice of notifying qualifying large IPOs on the first or second day of trading.

Under the MSCI Global Investable Market Indexes methodology, large IPOs are eligible for early inclusion after 10 trading days if they meet certain size thresholds on full and free-float-adjusted market capitalization, assessed at the close of the first or second trading day. This fast-track treatment waives the usual minimum three-month trading history requirement.

For foreign investors, the index entry matters beyond the passive money it will directly channel. The MSCI China All Shares Index covers A shares, Hong Kong listcos and Chinese companies listed overseas through American Depositary Receipts (ADRs), and is nested in the MSCI Global Standard Index series.

Once a stock enters the MSCI China indices, it draws tracking and allocation from more global passive funds. Market analysts noted that CXMT's inclusion will likely make it a new anchor for major indexes, as changes in constituent weights prompt index-tracking funds to rebalance, with capital flows rippling through the broader tech sector.

CXMT's shares surged 465.82 percent on their bourse debut, closing at 49 yuan ($7.22) per share and giving the company a market capitalization of more than 3.2 trillion yuan, making it the most valuable listed company on the A-share market.

Foreign capital, in fact, had started positioning itself before the index inclusion. On the day of CXMT's market debut, US-based Tema ETFs said it had added the company to its Tema Memory ETF (DISK) — a product focused on memory chip companies — as a top holding with a 10.56-percent portfolio weight.

"CXMT is uniquely positioned among the world's leading memory producers to serve China's rapidly growing AI ecosystem," said Yuri Khodjamirian, chief investment officer for Tema ETFs.

Another US exchange-traded fund, Roundhill Memory ETF, also established a position in CXMT within days, with the Chinese chipmaker becoming its sixth-largest holding at a 4.51-percent weight as of Sunday.

The early moves were made possible through total return swaps, as CXMT has not yet been added to the Shanghai-Hong Kong Stock Connect, a scheme linking Chinese mainland and Hong Kong markets. The two overseas ETFs' moves show Chinese chipmakers are being incorporated into the global memory industry's investment landscape, reported China Securities Journal, Xinhua's financial newspaper, citing market analysts.

The pattern fits a broader shift in how foreign capital views China. In May, MSCI's quarterly review added 19 A-share companies to its China indexes, with new entrants concentrated in optical communications, computing infrastructure and advanced manufacturing, while some financial and consumer names were removed.

This rebalancing signals a shift in the underlying logic of global investment in China, from favoring champions of the traditional economy to embracing leaders in hard-tech sectors.

For CXMT, the MSCI inclusion opens another funding channel at a critical juncture. The company, which swung from accumulated losses of 36.65 billion yuan through end-2025 to expected first-half net profit of 50 billion to 57 billion yuan, is investing heavily in capacity expansion and next-generation memory technology. Analysts expect its full-year net profit to exceed 120 billion yuan in 2026.

In the context of rapidly expanding AI computing demand, CXMT's listing strengthens the capabilities of China's high-end storage supply chain and provides solid support for the country's computing and AI industries, said Manulife Investments, a foreign-invested fund management company in China.

Zhang Jun, chief economist of China Galaxy Securities, said foreign investors' increased holdings in Chinese assets are not a short-term trading move, but a medium — and long-term strategic allocation.

"The underlying logic of foreign capital allocation in China has fundamentally changed," Zhang said, citing three new drivers: the shift of China's growth engine toward technology and advanced manufacturing, the safety premium of Chinese assets in a volatile global environment and deepening institutional opening-up.

XINHUA-CHINA DAILY