Crypto Exchanges Facilitate Early Investment in Chinese AI Semiconductor Companies

Overseas investors are using perpetual futures on cryptocurrency exchanges to bet on pre-listing prices of Chinese AI semiconductor companies, effectively investing early in mainland China stocks. This new investment approach allows foreign investors to circumvent China's restrictions on capital inflows into the Shanghai and Shenzhen stock markets.

The case involves ChangXin Memory Technologies (CXMT), which is set to list on the Shanghai Stock Exchange's STAR Market on July 28, seeking to raise about $10 billion. TradeXYZ and Gate.com have listed perpetual futures tracking CXMT ahead of its listing, with a trading volume of about $19 million in the past 24 hours.

Perpetual futures are contracts that allow investors to bet on rises or falls in share prices without holding actual stocks. They can be traded 24/7 and typically use stablecoins as margin. The industry views such products as being used to circumvent China's restrictions on foreign investment.