As the Chinese government has restricted foreigners' access to the onshore stock market, cryptocurrency exchanges are emerging as a new workaround for investing in China's artificial intelligence (AI) semiconductor stocks. With Chinese semiconductor corporations Changxin Memory Technologies (CXMT) now listed, crypto exchanges have launched derivatives tied to the stock's price, allowing overseas investors to bet on CXMT's price movements without holding the actual shares.
On the 26th, according to the Financial Times (FT), crypto trading platforms TradeXYZ and Gate.com launched perpetual futures (Perpetual Futures, Perps) linked to CXMT's share price listed on the Shanghai Stock Exchange's Star Market (kechuangban). Perpetual futures are derivatives with no maturity that let investors trade on the price movements of the underlying asset without owning the actual stock. Before listing, prices are formed based on the market's expected corporate value, and after listing, they are designed to track the actual share price.
In particular, the product is drawing attention because it can effectively circumvent limits on foreigners' access to China's stock market. Currently, foreigners can invest in the onshore market only through Stock Connect via Hong Kong or the qualified foreign institutional investor (QFII) program, and both the targets and the size of investments are restricted. The Star Market, where CXMT is listed, requires individual investors to have financial assets of at least 500,000 yuan (about 108 million won) and more than two years of investment experience.
According to crypto derivatives data firm Coinglass, about $19 million (about 27.875 billion won) worth of CXMT perpetual futures traded in the past 24 hours. Through this IPO, CXMT raised 57.22 billion yuan (about 1.25 trillion won). It is considered one of the largest initial public offerings (IPO) in China since 2010.
Amid this, crypto exchanges have recently been expanding into stock-based derivatives. They have introduced perpetual futures using companies scheduled to list, including OpenAI, and pre-IPO shares of SpaceX as underlying assets. TradeXYZ also launched a product offering up to 10 times leverage linked to Shanghai-listed semiconductor corporation GigaDevice Semiconductor. Matthew Fisher, CEO of decentralized finance (DeFi) platform Katana, said, "A market is taking shape where investors can trade foreign stocks and companies slated to go public that have been hard to access."
Still, because these products are derivatives tied to the underlying asset's price rather than actual securities, they are emerging as a new challenge for regulators. The Monetary Authority of Singapore (MAS) last month placed Hyperliquid, a major platform for CXMT perpetual futures, on its investor alert list.
Even so, the industry expects more products of this kind to appear. Leshi, head of trading at digital asset market maker Auros, projected, "Within five years, most U.S., Hong Kong and Japan stocks could trade in the crypto market as well."
Meanwhile, on the 27th, CXMT on its first day of listing on the Shanghai Stock Exchange's Star Market surged more than 400% in early trading from its offer price of 8.66 yuan. At one point during the session, it rose to No. 1 in market capitalization on China's stock market. However, with only about 6% of shares freely tradable immediately after listing, some analysts say initial price volatility could be high.