China Morning Missive IPOs as a Strategic Lever Capital formation in China is back with a vengeance and is being strategically deployed for the expressed purpose of countering America’s technological dominance. Over the past two months the pace of IPOs has been frenetic both in Hong Kong and on the upstart STAR Market here in Shanghai. While western business media has covered a handful of highly publicized chip makers going public, what has been missed is how Beijing is accelerating the use of the primary market to funnel capital towards key industries of geopolitical significance. Before commenting on the strategic nature underlying the renewal of Chinese IPOs, it is well worth noting that the move wouldn’t have been possible had Chinese retail investors not turned decidedly “risk on”. There has been a palpable shift in sentiment over the past year, and while Chinese households do remain cautious over the near-term economic prospects there has been a recognition of a vast improvement directionally. That said, the primary driver of retail investor demand is a genuine excitement over Chinese tech/AI companies demonstrating an ability to not just match their American rivals, but – in more than a few cases – out innovate. DeepSeek, it is now clear, wasn’t a “moment”, it was an insurgent declaration of intent and ability. What resulted was a solid 2025 for equity returns and performance has continued to deliver so far this year. In fact, volumes of late have been at or near record highs. It does need to be mentioned, however, that Chinese investors are limited when it comes to available alternatives to allocate capital. With property still viewed as toxic and limited upside to fixed income then meant a shift back to equities was expected. At the same time, Chinese retail investors are the tail which wags the dog and they’ve a ton of idle capital sitting on the sidelines. What all of this has meant is an opportunity for Beijing to strategically direct growing end investor demand. With all approvals to list tightly controlled by the CSRC, China’s securities regulator, the decision was made to prioritize those companies building capabilities and critical infrastructure that could best ameliorate the containment threat posed by America. The uniqueness of the policy, however, went even farther. The IPO process favors companies that are at an earlier stage of development, even loss-making and, additionally, approvals to list are also widespread with a far greater number of such companies greenlit to IPO and a stark departure from previous periods. Take but a few examples from just last week; GPU maker Iluvatar CoreX and Edge Medical which manufactures surgical robotics. These companies raised $473million and $154million respectively and, currently, trade with market capitalization of around $6.0billioin and $3.0billion. Small in size by just about any measure, but forward leaning industrial players and, once again, only a small sample set of the multitude of the types of companies now going public. The concept of “market cap” doesn’t even register as a priority KPI here in China and directing capital is an activity solely meant to optimally deliver on both market and political objectives. This isn’t a new concept, but the leveraging of IPOs is. There will, ultimately, be a considerable destruction of capital as an outcome of this IPO policy, as was evident with the solar and EV industries. The policy, however, will also deliver an array of world leading companies as well, again as is evident with the solar and EV industries. https://m.investing.com/news/stock-market-news/china-ai-chipmaking-stocks-extend-rally-as-ipo-boom-boosts-sentiment-4440684?ampMode=1