China's largest memory chipmaker sparks fears of a cash drain as it readies for public debut

"The primary reason for this pullback lies in crowded positioning and high leverage levels within the A-share tech sector," Sun said, adding that the correction in Korean chip stocks spilled over into global semiconductor valuations and has triggered profit-taking in China. Benjamin Cavender, managing director at CMR Consulting, said that it was "plausible" that the deal was creating a near-term liquidity effect, particularly in the STAR Market and among semiconductor and AI stocks, given its size. But, "CXMT may be acting less as the original cause of the sell-off than as a catalyst that concentrates an existing concern."Cavender said the phenomenon resembles the "cash call" effect seen around major IPOs, when investors rotate out of listed companies to raise cash for highly anticipated offerings.