CXMT’s Absence Leaves CSI 300 Missing China’s Biggest Stock

China’s CSI 300 Index risks losing its appeal as the nation’s key benchmark until it includes memory giant CXMT Corp., an event that’s unlikely to happen until the end of 2027, according to Bloomberg Intelligence.

The CSI 300’s rules bar companies listed on the Shanghai Stock Exchange’s tech‑heavy STAR market from joining the index during their first year. Unless waived, this rule would apply to CXMT, which had a blockbuster debut last month on STAR to become China’s largest listed company.

Exchange-traded funds tracking the CSI 300 may suffer outflows until CXMT is added, Bloomberg Intelligence analysts including Rebecca Sin wrote in a note. “Until then, the index won’t include the market’s biggest stock, resembling the S&P 500 stripped of Nvidia,” they added, referring to the US chip giant.

Read more: Missing CXMT Risks Turning CSI 300 Into S&P 500 Without Nvidia

The issue is coming to the forefront as China leans on AI and tech to power the economy and a lasting stock rebound. Institutional investors risk missing out on early gains of some of the nation’s most consequential companies, potentially pushing them toward gauges like the Star 50 Index, which offers greater exposure to emerging technology.

The situation may worsen as other high-profile tech firms, such as chipmaker Yangtze Memory Technologies Co., plan initial public offerings, potentially on STAR. Unitree Robotics has already confirmed that it plans to list on that board, and AI developer DeepSeek is also eyeing an IPO.

“These companies might face extended, overlapping periods of waiting before they join the CSI 300, during which time the index would provide relatively little exposure to the listed companies driving China’s next phase of growth,” the BI analysts said.

CXMT’s absence in the benchmark, given its market value of about 3.5 trillion yuan ($524 billion), would be conspicuous. The firm will eventually enter the CSI 300 with a weighting of around 7.8%, commanding roughly the same weight as Nvidia Corp. has in the S&P 500, according to BI.

China Securities Index, which runs the CSI 300, could grant CXMT an exemption for faster entry, but that’s unlikely, BI analysts said.

SpaceX was similarly fast-tracked in the US, only to fall below its IPO price by early August. Such an outcome for CXMT could drag the CSI 300 down and “cause reputational damage to the market,” they wrote.

Meanwhile, CXMT is likely to enter the Star 50 Index in the coming months with a weight of around 9%, they said.

The STAR 50 Index has climbed 28% this year, while the CSI 300 has edged up by 0.7%

“China’s AI capex cycle is where the US was in 2023, and the Star 50 Index provides the highest exposure to the winners of that spending boom,” Societe Generale analysts including Manish Kabra wrote in a note.