CXMT’s $8.6B IPO sparks China’s worst weekly sell-off in over two years

Published 2 hours ago 44 sources

China’s stock markets closed sharply lower on Friday, posting their worst weekly performance in more than two years, as fears of a liquidity drain tied to memory chipmaker ChangXin Memory Technologies’ $8.6 billion initial public offering rattled investors and a global rout in technology shares deepened the pain across Asia.

CXMT's $8.6B IPO sparks China's worst weekly sell-off in over two years

Mainland Markets Buckle Under IPO Pressure

The Shanghai Composite fell 3.05% to 3,764, a 10-month low, while the Shenzhen Component Index plunged 5.4% and the ChiNext tumbled 7.15%, according to Hong Kong broadcaster RTHK. The tech-heavy SSE STAR 50 also suffered steep losses during the week, with the CSI AI Index and the CSI Integrated Circuits Index each dropping around 6% on the day, Reuters reported. Eeconomictimes RRthk

At the center of the storm was CXMT, China’s leading DRAM chipmaker, which set an IPO price of 8.66 yuan per share and expects to raise about 57.9 billion yuan before any over-allotment option in what would be Asia’s largest listing of 2026. The company plans to list on the STAR Market on July 27. Retail subscriptions exceeded available shares by 212 times, yielding a lot-winning rate of roughly 0.47%, according to a stock exchange filing cited by Reuters. While that figure appears large, it was notably more muted than the frenzy that has accompanied many recent Chinese IPOs, feeding concerns about waning appetite for high-priced tech offerings. Rreuters Wwmbdradio Rreuters

Analysts said investors had begun shifting funds out of existing technology holdings to free up capital for the CXMT subscription, intensifying selling pressure across the sector. China’s state-backed Shanghai Securities Journal sought to reassure markets, arguing that large IPOs do not alter the broader trajectory of equities and that system-wide liquidity remains ample. The message did little to calm nerves. Eeconomictimes

Global Tech Rout Compounds the Damage

The selloff was not confined to mainland China. Hong Kong’s Hang Seng Index fell 1.8% to 24,562, with its technology sub-index dropping 4.4%. In Tokyo, the Nikkei 225 briefly plunged more than 4,100 points — over 6% — before trimming losses to close down 4.03% at 64,141, entering correction territory after falling more than 10% from its all-time high set on June 25. Memory chipmaker Kioxia Holdings hit its daily limit down in Tokyo. Rreuters Jjapantimes RRthk

The Wall Street Journal reported that Nasdaq 100 futures dropped sharply Friday morning as the chip-stock selloff continued to reverberate, with companies including Applied Materials and Dell Technologies among the hardest hit in premarket trading. Weeks of growing skepticism over whether massive AI infrastructure spending can justify elevated semiconductor valuations had already been eroding sentiment. Wwsj Nnbcnews

Conference and Geopolitical Unease Add to the Gloom

Adding to the uncertainty, the 2026 World Artificial Intelligence Conference opened in Shanghai on Friday, with President Xi Jinping expected to outline China’s AI diplomacy vision. But rather than lifting spirits, the event coincided with broader doubts about the pace of returns on global AI investment. Renewed tensions linked to the conflict in Iran further weighed on the region’s markets, particularly in Hong Kong. Ppeople Rreuters Eeconomictimes

Peter Alexander of Z-Ben Advisors warned on CNBC that CXMT’s listing heralded a “China Shock 3.0” in the memory sector, underscoring how the IPO has become a lightning rod for anxieties about China’s tech ambitions and the fragility of a rally that lifted the Shanghai Composite to a decade high earlier this year. Ccnbc Gglobaltimes