CXMT, China’s Leading DRAM Pioneer, Included in MSCI Index... Inflow of Funds Expected
Included via Fast-Track Only 10 Trading Days After Listing
CXMT, a leading Chinese DRAM company, has been included in the China-related indices of global index provider Morgan Stanley Capital International (MSCI). As passive funds tracking the index are expected to flow in, there is a growing outlook that CXMT will further solidify its position as the company with the largest market capitalization in the Chinese mainland stock market.
According to China Central Television (CCTV) and other sources on August 10 local time, CXMT was officially included in the "MSCI China All Shares Index" on this day. The index is comprised of stocks of Chinese companies listed on the Chinese mainland A-shares, as well as Hong Kong and US stock exchanges. Typically, addition to an MSCI index requires a quarterly review, but large initial public offerings (IPOs) can be included through a "fast-track" process if certain conditions are met, starting from the tenth trading day after listing.
CXMT was listed on the STAR Market of the Shanghai Stock Exchange on July 27. On the first day of trading, its share price surged by 465.82% to 49 yuan from the initial public offering price of 8.66 yuan, making it the company with the largest market capitalization in the Chinese mainland. As of August 10, the closing price was 51.30 yuan, and its market capitalization was calculated at 343 billion yuan (about 721 trillion won).
The South China Morning Post (SCMP) reported that CXMT’s top market capitalization position is likely to be further strengthened through the inflow of passive funds following its inclusion in the MSCI index. Ping An Securities also projected that demand for passive fund allocation will increase, along with greater interest in China’s semiconductor and memory supply chain. There is also a possibility that CXMT could be included as early as September in the VanEck Semiconductor Exchange Traded Fund (ETF) and the STAR 50 Index, which is composed of the 50 representative stocks of the STAR Market.
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If CXMT is added to the STAR 50 Index, additional inflows of funds, possibly amounting to several billion yuan, may occur. UBS forecasts that CXMT’s share in the global DRAM market will rise from about 7% last year to approximately 10% by 2028. During the same period, its share of the Chinese server DRAM market is expected to increase from around 12% to 20%.
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