Korean investors have started buying CXMT Tech through the Qualified Foreign Investor, or QFI, channel.
According to data from SEIBro, a platform operated by the Korea Securities Depository (KSD), Korean investors were net buyers of $45.322233 million worth of CXMT Tech as of Aug. 18 over the previous month, equal to about RMB 307.53 million. That made it the top A-share by net buying among Korean investors during the period. Over the past three months, the company also remained No. 1 on the list of A-shares most heavily net bought by Korean investors.
SEIBro data showed that the stock did not yet have an ISIN code. An ISIN, based on the ISO 6166 standard, is a 12-character international securities identification code used to give each security a unique global identifier. It is widely used in cross-border trading, registration, and settlement, and is separate from exchange trading codes. Once the required procedures are completed, each security receives its own ISIN.
That was the reason the stock initially appeared as something of a mystery on the Korean system. KSD’s securities data division told China Fund News that the security had not yet been assigned an ISIN. Because Korean securities firms trading it as QFI participants must submit settlement instructions to KSD, and those instructions require an ISIN, the relevant firms temporarily used a virtual code. The displayed security name was shown based on that temporary virtual ISIN.
KSD’s securities data division added that the stock trades only on China’s STAR Market and has not been included in the Shanghai-Hong Kong Stock Connect mechanism. For now, related information can only be retrieved using its local code, 688825. That code belongs to CXMT Tech, which was recently listed on the STAR Market.
CXMT Tech is currently accessible only through QFI
Because CXMT Tech has not yet entered the stock connect scheme, Korean investors can only buy it through the QFI route at this stage. At present, overseas investors can access A-shares mainly through Stock Connect or through QFI.
Under Stock Connect, investors do not need to apply for qualifications and can buy through the Hong Kong Exchange platform. Under QFI, investors need to obtain QFI qualification. The report said the application process has been significantly simplified compared with the past.
Large purchases of CXMT Tech also lifted Korean investors’ overall net buying of A-shares. As of Aug. 18, Korean investors’ largest net purchase in A-shares over the past month was CXMT Tech at $45.3222 million, while their largest net purchase in Hong Kong stocks was the Hong Kong-listed Zhongji Xuchuang at $44.27 million.
Buying had started by July 28 at the latest
A search of SEIBro also showed that, as of July 28, CXMT Tech had already appeared among the stocks with leading net purchases by Korean investors in the previous week. By contrast, as of July 27, it did not appear in the top 50 A-shares by weekly net purchase amount among Korean investors.
The report added one caveat: Korean investors may already have bought the stock before then, but the net purchase amount may not yet have been large enough to put it in the top 50. Even so, the data indicates that Korean investors had begun buying no later than July 28, the second day after the company’s listing.
Other A-share stocks and ETFs that drew relatively large purchases from Korean investors over the past month as of Aug. 18 included Weichai Power, Demingli, JCET, Harvest STAR Chip ETF, China National Chemical Engineering, Hangyu Technology, Advanced Micro-Fabrication Equipment, Kelu Data, and China Jushi.
In Hong Kong stocks, besides Zhongji Xuchuang, names with relatively large purchase amounts over the past month included Trenda Automotive Trim, ChinaAMC CSI 300 Index ETF, CMBC Capital Holdings, and CSOP Hang Seng Tech ETF.
Overseas active ETFs moved in on listing day
CXMT Tech’s listing drew a quick response from overseas ETF issuers.
On July 27, the day the company listed, Tema ETFs said it had added CXMT Tech to the holdings of Tema Memory ETF, ticker DISK, making it one of the fund’s major positions with a weight of 10.56%. The report said that made DISK the U.S.-listed ETF with the highest exposure to CXMT Tech.
Tema ETFs Chief Investment Officer Yuri Khodjamirian said, 「Growing AI demand and a global shortage in memory are driving a sharp rise in memory prices and profits. Among the world’s leading memory manufacturers, CXMT holds a unique position to serve China’s rapidly expanding AI ecosystem. DISK invested on the morning of CXMT’s IPO, reflecting the active flexibility and professional judgment needed to capture this kind of opportunity that remains out of reach for most investors.」
Another active ETF, Roundhill Memory ETF (DRAM), later also added CXMT Tech. Global index providers also moved. MSCI China All Shares Index has already included the company, which means ETFs tracking that benchmark will buy the stock passively.
Earlier, VanEck had also told China Fund News that its China semiconductor ETF could add CXMT Tech as soon as September.
The report was originally published by the WeChat account China Fund News (ID: chinafundnews) and written by Wu Juanjuan.