As Chinese memory chipmaker ChangXin Memory Technologies (CXMT) rose to the top of the mainland by market capitalization upon its stock market debut, moves to invest in CXMT are also emerging in the cryptocurrency market. With strict regulations on foreign investment in Chinese mainland stocks, perpetual futures (Perps), which allow bets on stock price movements without holding actual shares, are rising as a backdoor investment vehicle.
According to the Financial Times (FT) on the 26th, cryptocurrency derivatives data provider CoinGlass tabulated that CXMT perpetual futures trading volume reached approximately $19 million (about 27.8 billion won) over 24 hours, one day ahead of the CXMT listing. Perpetual futures were originally created as derivatives for betting on price movements of cryptocurrencies such as bitcoin, but their scope of use has recently broadened to products tracking the prices of traditional financial assets, including stocks and exchange-traded funds (ETFs). As a result, some cryptocurrency exchanges have successively launched perpetual futures linked to the stock price ahead of the CXMT listing, drawing investor interest.
The product is gaining attention because it is seen as a way to circumvent Chinese government regulations. Currently, foreign investors can invest in Chinese mainland stocks through the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programs, which link Hong Kong and the Chinese mainland, or through the Qualified Foreign Institutional Investor (QFII) system. However, the prevailing assessment is that regulations, such as investment limits and eligibility requirements, are demanding. In contrast, perpetual futures allow investors to bet on price movements without holding actual shares, emerging as a new investment channel for overseas investors.
In the market, some evaluate this trend as a financial innovation that breaks down the boundaries between traditional finance and the cryptocurrency market. Rishi Gupta, head of trading at cryptocurrency firm Auros, said, "This product is attracting great attention because it is creating a new asset class with real demand and use cases that did not exist in traditional finance." He added, "It would not be at all surprising if, within the next five years, an era arrives in which most stocks listed on major exchanges, including those in the U.S. as well as Hong Kong and Japan, are traded in the cryptocurrency market."
On the other hand, some analysts say this poses new challenges for Chinese regulators, as clear standards for how to classify and supervise these products as financial instruments have not yet been established.
Meanwhile, on the 27th, CXMT closed at 49.0 yuan on its first day of trading on the STAR Market—the Shanghai Stock Exchange's science and technology board known as "China's Nasdaq"—up 465.82% from its offering price of 8.66 yuan. CXMT's market capitalization stood at 3.28 trillion yuan (about 711.7 trillion won), surpassing the 2.76 trillion yuan (about 598.9 trillion won) held by the previous top-ranked Industrial and Commercial Bank of China (ICBC). This also exceeds Intel's market capitalization of $465.66 billion (about 683.8 trillion won), based on the market cap tracking site CompaniesMarketCap.
