SpaceX IPO fever sparks hunt for proxy plays in Asia

SINGAPORE: SpaceX's $75 billion IPO is fuelling a frenzy among investors in Asia for ETFs and supply chain partners linked to Elon Musk's rocket company that are likely to benefit from the blockbuster deal. Shares of satellite and rocketry-related companies worldwide have surged as everything from Starlink component manufacturers to ETFs that own private shares in SpaceX draw strong demand. Retail investors are set for a larger-than-usual slice of the big-ticket IPO, with SpaceX considering allocating as much as 30% to individual investors while targeting a valuation of about $1.75 trillion. The final IPO price is due to be set on June 11, with trading on Nasdaq starting the next day. However, with restrictions in parts of Asia on how retail investors may access the IPO, traders are scoping out regional suppliers to ride the SpaceX-driven rally. Hu Xiaobin, a retail investor from Anhui province, bought speculative plays in China, buying Sunway Communication , a supplier to Starlink ground terminals, and Western Superconducting Technologies, a supplier of specialty metals for rockets, over the past two months. "I dug out adjacent companies in A-shares by myself and made quite a bit of money," he said, deeming it "value speculation." Hu, a big fan of Musk, has exited the two stocks ahead of the SpaceX IPO. Shenzhen-listed shares of Lens Technology, a supplier to Apple and Tesla, have surged nearly 50% to record highs this year after the company flagged commercial space as a new growth driver. Investor enthusiasm has been further fuelled by optics: Lens Chairman Zhou Qunfei was seated between Apple CEO Tim Cook and Musk at a Beijing banquet in May held to welcome U.S. President Donald Trump, spurring wagers that the company could deepen business ties with Musk's firms. "For local retail investors, getting a direct piece of the IPO book is going to be incredibly tough," said Jeffrey Chan, a director at Hong Kong's Central Asset Management, adding that SpaceX is probably a must-own asset for global growth funds. SpaceX's website and IPO marketing documents were not accessible in Hong Kong and mainland China, a Reuters review showed last week, while Bloomberg reported the space firm's underwriters have barred investors in China and Hong Kong from participating in the IPO. SPACE STOCKS TAKE OFF Shares of several European companies, including French satellite operator Eutelsat, German satellite maker OHB and Luxembourg-based SES, have posted double-digit gains this year. There has also been a flurry of space-themed ETF listings. Tema Space Innovators ETF, which has a 6.49% private exposure to SpaceX's pre-IPO shares, is up 29% since its launch in March. Tradr 2x Fly Long Daily ETF, a twice-levered bet on Firefly Aerospace, an unprofitable space company that performed the first successful commercial Moon landing last year, is another popular but volatile bet. Still, strategists say the phenomenon remains largely driven by retail money, with institutional investors showing little appetite so far. "It's a great story if you're a trader, and you'd want to bring it up," said Nicholas Smith, Japan strategist at CLSA in Tokyo. "But I doubt people would be making big bets on this." TAIWAN FOCUS In Asia, investors see Taiwan as a key gateway to the SpaceX supply chain. The island is home to satellite component makers Chin-Poon Industrial, Wistron NeWeb and Universal Microwave Technology, all of which have said they supply parts to Musk's rocket company. Central Asset Management's Chan pointed to Taiwan's Compeq , Tong Hsing Electronic and Kinpo as well as Japan's Meiko Electronics as some of the names traded as proxies for SpaceX exposure in Asia. Nick Wilcox, managing director for discretionary equities at Man Group, said the IPO will inject capital that could trickle down to companies in the supply chain. "We will see them (SpaceX) forging greater tie-ups with suppliers to facilitate the next leg of CAPEX. And there is a raft of Asian companies that will be highly benefiting from that," Wilcox added.