Shanghai Builds a Taller Tower

Three weeks ago I wrote about America building its tallest “tower” yet.

And by “tower” I mean mega-floats stacking up: SpaceX, SK Hynix, and others are all cashing in while confidence runs hot.

Turns out I was watching the wrong skyline.

Shanghai went higher

CXMT Corp listed on Shanghai’s STAR Market on Monday.

The memory chipmaker opened 472% above its issue price, then climbed as much as 535% before the morning was out.

At that opening price the company was worth about 3.3 trillion yuan, or roughly US$487 billion.

Let that resonate.

That is more than BHP [ASX:BHP] and Commonwealth Bank [ASX:CBA] combined, with plenty left over.

Created in a single session, by a company most Australian investors had never heard of last week.

The maths that should bother you

Here is the part I keep coming back to.

CXMT was actually priced cheaply on purpose.

Chinese regulators lean on companies to issue below global peers, which is meant to protect small investors from getting burned.

At the 8.66 yuan issue price, the stock came to market at 2.4 times book value.

Book value is roughly what the company’s assets are worth on paper, so investors were paying 2.4 times that.

Bloomberg Intelligence pegged it as a 56% discount to the average for SK Hynix [NASDAQ:SKHY], Micron [NASDAQ:MU] and Nanya, the three big rivals in DRAM, the memory chips that sit inside everything from your phone to an AI server.

So the discount was real.

For about nine seconds.

By the opening bell, 2.4 times book had become roughly 13.7 times book.

That puts CXMT at around two and a half times the average multiple of its global chip peers.

The cheap float turned expensive before anyone could buy a coffee.

Retail did the heavy lifting

The retail portion of the deal was 212 times oversubscribed.

Seriously!?

Oh yeah.

Individual investors lodged 9.4 million orders worth 7.07 trillion yuan.

Bloomberg reckons that is about ten times the retail order book of SpaceX’s world record float last month.

Ten times. For a chipmaker in Hefei.

Why this matters for the second half

Back at the beginning of the month I made the point that floats cluster when prices are high and expected returns are low.

Insiders sell when the buying is easy.

Have a look at China’s IPO curse. Mainland mega listings have a habit of showing up just before selloffs:

Source: Bloomberg

[Click to open in a new window]

And the queue behind CXMT is long. Yangtze Memory and Baidu’s chip unit Kunlunxin are lining up, and DeepSeek may file this year.

Two of the world’s biggest sharemarkets are now running the same play at the same time.

That is a lot of exit liquidity hunting for a home in the back half of 2026.

What am I doing about it

Nothing dramatic.

But I am taking a harder look at how much of my portfolio’s resource exposure can withstand a change of fortunes.

If the memory trade cracks in Shanghai, it may not stay in Shanghai.

That taller they build ‘em, the harder they fall.