MetaX, Moore Threads IPOs exploded, but it’s not easy for foreigners to

China’s hottest artificial-intelligence listings are delivering eye-popping gains.

Shares of chipmaker MetaX Integrated Circuits skyrocketed almost 700% in their Shanghai market debut last week, while Moore Threads soared over 400% on its first day of trading earlier this month.

While domestic investors scramble for exposure to promising Chinese tech listings, overseas investors are largely left out from partaking in such blockbuster offerings.

Foreign retail investors in particular are shut out of mainland China IPOs: “It’s not even possible. Unless they open up an account with a Chinese broker,” said Chris Zhang, executive director at Chinese financial services firm China Fortune Securities Company.

Opening an onshore brokerage account with a Chinese securities firm requires a linked Chinese bank account, which generally requires a proof of residence in China, or a Chinese visa with sufficient validity. Foreigners also need to already hold other mainland-listed shares before being eligible to participate in an IPO lottery.

Most foreign banks do not have the necessary arrangements with Chinese brokers to support account openings, Zhang said, making the process unworkable for the vast majority of overseas retail investors.

Official guidance from Shanghai’s city government states that only a narrow set of foreign individuals can directly open brokerage accounts for A-shares — stocks listed in mainland China. For example, foreigners with permanent resident status, workers in China, or foreigners working abroad with equity incentive plans in A-share listed companies.

For many global investors, Stock Connect, a program that allows Hong Kong and mainland Chinese exchanges mutual access to each other’s stocks, is the most convenient way to gain exposure to Chinese equities.

It allows overseas investors to buy A-shares through their Hong Kong brokers without needing an onshore account, or special licenses— but the scheme offers little help when it comes to IPOs, or even freshly listed stocks. Access also depends on Hong Kong brokers’ eligibility requirements, such as minimum account balances and risk disclosures.

“Stock Connect does not work because newly listed stocks are not included in Stock Connect as yet. Usually it takes a few weeks to months should the stocks qualify,” said Theodore Shou, chief investment officer at Skybound Capital.

Inclusion of companies in the Stock Connect scheme depends on whether a stock meets the eligibility rules such as sufficient trading activity and market value, which often requires a period of trading and data history for qualifying.