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 asset performance while channeling capital into new quality productive forces.

Zeng Gang, deputy director of the National Institution for Finance and Development, said that banks' wealth management subsidiaries have extended their listing 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 tech sectors such as semiconductors, artificial intelligence and biomedicine.

Data from the Shenzhen Stock Exchange show 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 robust growth in terms of participation frequency, diversified channels and a focus on hard-tech sectors.

As of May 20, ICBC Wealth Management had participated in 17 Hong Kong IPOs so far this year, achieving a 100 percent success rate in securing allocations and a weighted average return on investment exceeding 100 percent. Among these, the company played a significant role as a cornerstone investor in six key projects, covering core sectors of national strategic importance such as semiconductors, new energy and high-end manufacturing.

CMB Wealth Management said on May 9 that it had recently participated in subscriptions for high-quality new listings spanning frontier sectors such as green manufacturing, intelligent manufacturing, spatial intelligence, semiconductors and optical computing power via its Hong Kong IPO subscription strategy.

The growing enthusiasm among banks' wealth management subsidiaries for IPO subscriptions is being driven by pressure on returns. In 2025, the average yield on wealth management products across the market fell below 2 percent. As the potential for returns on traditional fixed-income assets continued to shrink, institutions were compelled to seek breakthroughs through higher-yield strategies, and IPO subscriptions offered a path with relatively controllable risk and a higher degree of certainty regarding excess returns, Zeng said.

Lou Feipeng, a researcher at Postal Savings Bank of China, said IPO subscriptions guide capital toward high-quality listed firms and ultimately channel funds into the research, development and production activities of real-economy enterprises.

China has provided policy support for banks' wealth management units to participate in IPO subscriptions. On March 28, 2025, the China Securities Regulatory Commission announced that lenders' wealth management products would be included in the scope of priority allocation for IPOs. This marks the formal elevation of banks' wealth management subsidiaries to Category A investors, granting them the same allocation treatment as mutual funds under the criteria for new-share subscriptions.

Dong Ximiao, chief economist at Merchants Union Consumer Finance and deputy director of the Shanghai Institution for Finance and Development, said that Category A investor status grants wealth management subsidiaries greater flexibility in asset allocation, driving the expansion of "fixed income plus" and equity-related products. This not only optimizes the structure of WMPs, but also enhances the competitive advantage of bank WMPs within the asset management sector.

jiangxueqing@chinadaily.com.cn