Asian investors look for novel ways to join SpaceX’s US IPO excitement

Lead

When SpaceX launched its initial public offering last week—the largest ever—investors across Asia found themselves largely on the sidelines. With no direct access to the shares, traders from Seoul to Shanghai have been scrambling for alternative ways to get a piece of the action, piling into companies along the space supply chain and industry-themed exchange-traded funds (ETFs), as reported by the South China Morning Post.

The scramble reflects widespread anticipation that SpaceX’s market debut could generate significant gains, even for those who cannot buy the stock itself. “We have seen rising curiosity from clients across unusually diverse trading profiles and risk appetites,” said Hebe Chen, an analyst at Vantage Global Prime, in comments carried by the South China Morning Post. “The level of interest around SpaceX feels less like a normal IPO inquiry and more like investors trying to secure a seat before the rocket leaves the launch pad.”

The IPO’s scale—valued at US$75 billion—has drawn attention not only from retail investors but also from regulators and national security officials, as reporting by ProPublica has highlighted concerns about who had previously invested in the company while it was private.

Coverage Comparison

The two outlets that have covered this story approach it from markedly different angles. The South China Morning Post focuses on the investor experience in Asia: the lack of direct access, the workarounds, and the market dynamics. ProPublica, in contrast, zeroes in on the national security dimensions of SpaceX’s investor base, drawing on a private investor list it obtained.

The South China Morning Post reports that Japan and Australia are the only countries in Asia-Pacific where retail investors have direct access to the IPO. Elsewhere, investors are finding creative workarounds. In South Korea, some retail investors sought allocations through local broker Mirae Asset Securities via a private placement that, according to Yonhap Infomax News, sold out within one minute. For everyone else, the next-best trade has become the supply chain and peers.

ProPublica’s reporting delves into a more sensitive aspect: the identity of some overseas investors who held stakes in SpaceX before it went public. The outlet obtained a private investor list that it says sheds light on which people in countries like China bought into the company and how. The list details at least a dozen investors with addresses in mainland China, Hong Kong, or Russia who acquired stakes through a middleman firm in the US called Tomales Bay Capital, with investments ranging from $800,000 to $40 million made between 2018 and 2021.

Key Claims

• Asian investors largely shut out: Investors across Asia have been largely shut out of SpaceX’s IPO, forcing them to find alternative ways to invest, as reported by the South China Morning Post.
• Alternative investment routes: Traders are piling into companies along the space supply chain and industry-themed ETFs in hopes of capturing some of the gains from SpaceX’s IPO, according to the South China Morning Post.
• Direct access limited to Japan and Australia: Japan and Australia are the only countries in Asia-Pacific where retail investors have direct access to the IPO, as reported by the South China Morning Post.
• Supply-chain bets: Companies linked to SpaceX have attracted bets that a fresh influx of capital will boost the entire industry, according to the South China Morning Post.
• Chinese and Qatari stakes: A businessman with ties to Chinese military contractors acquired a stake in SpaceX while it was still private, and an entity linked to the Qatari royal family also took a stake, according to ProPublica.
• IPO restrictions: SpaceX barred investors from China and Hong Kong from buying shares in its IPO due to “regulatory and compliance risks,” as reported by Bloomberg, cited in ProPublica’s article.
• US government allegations: The US government alleges that China has a strategy of using investments in sensitive industries for espionage and to gain access to cutting-edge technology, as reported by ProPublica.

Perspectives

ProPublica (national security focus): SpaceX’s reliance on sensitive US government work, combined with the revelation that some Chinese investors held stakes, underscores potential national security risks. The US government alleges China uses such investments for espionage and technology access.

South China Morning Post (investor access focus): The story is primarily about investor demand and market adaptation: with direct access limited, Asian investors are finding creative ways to participate in the SpaceX boom, reflecting strong interest and high risk appetite.