China’s AI chip drive: MetaX and Iluvatar swing to profit, as Biren narrows losses

Chinese markets are seeing a surge in new public stock offerings, fueled by the popularity of artificial intelligence and other advanced technologies. A growing trend is for companies to list their shares in Hong Kong and Shanghai.

E-commerce giant Shein, founded in China in 2016, is set to debut its shares in Hong Kong on Tuesday, marking one of the largest share sales this year. The IPO is expected to raise $1.7 billion. In July, CXMT, China's largest memory chipmaker, raised over $8.6 billion in Shanghai, making it the second-largest IPO in its Nasdaq-style STAR market. Unitree, a leading maker of humanoid robots, also listed in Shanghai in August, with shares soaring 460% on the first day of trading.

The current IPO boom in China is driven by investor interest in AI and robotics, according to Ruiying Zhao, a senior research analyst at S&P Global Market Intelligence. Shanghai's stock market is heavily influenced by retail investors. CXMT's IPO in Shanghai positioned China strategically in tech manufacturing related to AI, highlighting the country's ambitions for tech self-sufficiency.

IPO proceeds in Hong Kong and Shanghai so far this year have surpassed the funding raised last year, totaling over $54 billion, according to the financial data platform LSEG. This surpasses last year's total of over $46 billion. Combined Hong Kong and Shanghai proceeds account for roughly 21% of global IPO activity, ranking them only behind the Nasdaq's roughly 55% share, LSEG reports.

Chinese companies list overseas, particularly in Hong Kong, to raise international capital due to foreign purchase restrictions on mainland exchanges. Stricter regulatory scrutiny in the U.S. and China has led some firms to avoid U.S. markets, especially in strategically important sectors. Recent public listings in Hong Kong, such as Luxshare Precision Industry and Zhongji Innolight, reflect investor demand for advanced technologies.

Robotics firms AGIBOT and Deep Robotics are also exploring IPOs in Hong Kong. Shein considered U.S. and London listings before settling on Hong Kong. Investors are cautious about a potential AI bubble in China. While some companies have seen their market value shrink following massive oversubscriptions and huge gains in their share debuts, Zhao from S&P notes that AI sentiment alone is not enough for a durable market cycle.

Investors will demand sustainable revenue, visible profit margins, and realistic valuations for a robust AI-driven market.