China's wealth management funds are racing to capitalize on the booming IPO market, rapidly expanding allocations to new-share subscription strategies as they seek higher returns and stronger exposure to the country's emerging growth sectors.
Against a backdrop of narrowing fixed-income yields, the "fixed income plus IPO subscription" model is quickly becoming a favored strategy for boosting product performance while channeling capital into new quality productive forces.
Zeng Gang, deputy director-general of the National Institution for Finance and Development, said that banks' wealth management subsidiaries have extended their IPO subscription activities from participating in offline A-share allocations into diversified areas such as Hong Kong IPO cornerstone investments and private placements. Investments are highly concentrated in technology sectors, including semiconductors, artificial intelligence, and biomedicine.
Data from the Shenzhen Stock Exchange shows that, as of May 18, three major wealth management subsidiaries of banks — BNB Wealth Management, CIB Wealth Management, and Everbright Wealth Management — had made a total of 239 IPO subscription quotations this year.
Xue Hongyan, a special researcher at Jiangsu Su Merchants Bank, said that, in recent years, banks' wealth management subsidiaries' IPO subscription activities have been characterized by explosive growth in participation frequency, diversified channels, and a concentration on hard-tech sectors.
