"CXMT's Listing Is Different from SMIC's"…Which ETF Should You Choose?[Weekend Money]

Yuanta: "No Bubble and Correction Like SMIC"

ETFs for Chinese Semiconductors Listed in Korea, Hong Kong, and the U.S. Introduced

The listing momentum of CXMT (Changxin Memory Technologies), China's largest DRAM manufacturer, is spreading warmth throughout the entire Chinese semiconductor value chain.

Ko Kyungbum, a researcher at Yuanta Securities, analyzed, "For the first time in the history of the Chinese stock market, a DRAM manufacturer aiming for mass production of HBM is going public, with the largest IPO ever on the STAR Market attracting 57.9 billion yuan (approximately 12.5486 trillion won) in subscription funds, drawing significant market attention."

Reuters Yonhap News

The Chinese government's drive for self-reliance is also closely related to this enthusiasm. Amid U.S. semiconductor sanctions against China, the country is accelerating semiconductor localization, increasing both policy-level and financial support. As of last year, China's semiconductor localization rate reached 35%, surpassing the government's 30% target. Above all, the market expects a 'trickle-down effect' for equipment suppliers if CXMT directs the funds raised through its listing to facility investment.

Ko particularly emphasized that the CXMT listing will differ from the past case of SMIC (Semiconductor Manufacturing International Corporation), previously China’s largest foundry. When SMIC went public on the STAR Market, its A-share price surged by 202.0% due to a concentration of funds, but its H-share price fell by 25.2%. Consequently, the A/H premium, which represents the price gap between A-shares and H-shares, widened to as much as 200%, resulting in share price adjustments as investors realized profits.

In contrast, with CXMT, valuation pressure is considered limited. Ko explained, "While the price-to-earnings ratio (PER) for 2025 is high at 308.9 times, this year’s forward PER is just 5.4 times, which is not excessive compared to peers." He added, "With continued CAPEX expansion and capacity increases driven by clear performance improvements, CXMT’s share of the global DRAM market is projected to grow to 11% by 2028."

He continued, "While investors should be wary of short-term volatility caused by initial supply-demand imbalances following CXMT's listing, there is ample room for mid- to long-term growth momentum based on improved valuation appeal and solid earnings for this year."

As a domestic ETF that could benefit from this trend, Ko pointed to 'TIGER China Semiconductor FACTSET.' He explained, "This ETF has a high weighting in the semiconductor sector and is focused purely on the semiconductor value chain among domestic ETFs." He added, "Earnings growth for Chinese semiconductor companies can be expected, backed by government nurturing policies and localization efforts."

For the Hong Kong stock market, he recommended the 'Global X China Semiconductor' ETF, noting, "This product invests widely in semiconductor companies, including fabless, foundry, and OSAT firms in China." He further commented, "It will benefit from increased support by the Chinese government aimed at accelerating domestic semiconductor self-reliance."

Regarding the U.S. stock market, Ko introduced 'VanEck China Semiconductor (SMHC)' ETF, which invests in 25 Chinese semiconductor companies with high market capitalization and liquidity within the semiconductor industry. It is characterized by intentionally excluding companies subject to sanctions, thereby helping to reduce risks associated with their inclusion.

This content was produced with the assistance of AI translation services.