Perpetual futures become shortcut to Chinese AI IPOs as overseas traders chase ‘perp’ bets
Global traders use perpetual futures to access Chinese AI IPOs, triggering stock jumps and raising questions over leverage, liquidity and oversight globally.
Perpetual futures draw offshore demand into Chinese tech listings
Perpetual futures have become a prominent tool for overseas investors seeking exposure to fast-rising Chinese technology names, particularly those tied to artificial intelligence, as global interest in AI surges. Traders say the contracts — which do not expire and allow for significant leverage — can replicate long equity exposure when onshore access is limited. The use of these derivatives has intensified around recent initial public offerings, helping to create early momentum for some listings.
Market participants describe the mechanism as a way to take a concentrated directional view without holding the underlying stock directly. That convenience has made perpetual futures attractive to hedge funds, crypto derivatives desks and retail platforms operating outside mainland China. The trend has coincided with several high-profile IPOs where prices jumped sharply after listing, a pattern traders associate with heavy "perp" positioning in the run-up to public offerings.
How perpetual futures and ‘perp’ bets work in practice
A perpetual futures contract resembles a futures agreement but lacks a fixed settlement date, instead relying on periodic funding payments between longs and shorts to anchor price to an index. When demand for long exposure rises, funding rates can turn positive, meaning long holders pay shorts and amplify the cost of maintaining positions. Leverage is typically offered by exchanges and brokers, so relatively small margin outlays can control substantial notional exposure.
Because they trade on offshore venues and often settle in stablecoins or dollars, perpetuals provide a bridge for investors barred or restricted from direct onshore equity access. Traders can scale positions quickly and exit via liquid derivative markets, which in some cases move ahead of the underlying stock. That dynamic has made perpetuals both a price-discovery mechanism and a source of volatility ahead of listings.
Unitree and CXMT exemplify pre-IPO perp-driven rallies
Recent listings have illustrated how perp-driven demand can precede significant IPO pops. Robots and humanoid-developer Unitree and memory-chip maker CXMT were among the names singled out by traders as having attracted concentrated perp interest before their market debuts. In both cases, heavy positioning in derivatives markets preceded large first-day gains on the equity side, a sequence that encouraged momentum traders to pile in.
Deal teams and market makers say they monitor derivatives order flow as part of IPO price discovery, though quantifying the exact contribution of perpetuals is complex. The correlation between concentrated perp flows and sharp post-IPO moves has prompted some institutional clients to flag the strategy as a shortcut to capture upside that might otherwise be constrained by onshore lockups, quotas or regulatory barriers.
Leverage, liquidity and the potential for abrupt reversals
The appeal of perpetual futures rests on leverage and sustained liquidity, but those same features can magnify downside when sentiment shifts. Funding-rate spikes reflect imbalances and can force deleveraging when financing costs become untenable, producing sudden price swings in both derivative and spot markets. Market-makers warn that thin liquidity in the underlying shares on listing days can exacerbate these moves, increasing the risk of abrupt repricing.
Margin calls and forced liquidations in highly leveraged structures have triggered sharp corrections in other asset classes, and traders caution the pattern could replicate in Chinese tech listings under certain stress scenarios. Because perpetuals are often traded on venues with varying levels of oversight, counterparty and settlement risks also figure prominently in risk assessments by institutional desks.
Regulatory scrutiny and market policy responses
Regulators in Hong Kong, mainland China and offshore jurisdictions are watching the rise of perpetual trading amid concerns about spillovers into listed markets. Officials have previously intervened around derivatives that impart outsized influence on underlying prices, and policy makers could consider tightening margin rules, disclosure requirements or cross-border trading restrictions. Market participants say any new measures would likely be calibrated to preserve liquidity while limiting systemic risk.
Exchanges and brokers are likewise adjusting risk controls, including higher initial margin thresholds and dynamic funding mechanisms designed to dampen runaway positioning. Stakeholders expect debate to centre on transparency — whether derivative flows should be more visible to investors and issuers — and on aligning offshore derivative practices with domestic capital market safeguards.
Who is using perps and what they aim to achieve
The investor base for perpetual futures spans active quant funds, prop trading desks, cryptocurrency-native derivative houses and an expanding slice of retail traders using margin-enabled platforms. Institutional participants typically use perps for short-term directional plays or as part of arbitrage strategies, while retail traders often view them as a high-leverage route to capture quick gains. Offshore demand has been particularly strong where direct equity access is limited by quotas, capital controls, or logistics.
Deal makers and sell-side analysts caution that the proliferation of perp strategies may influence how IPOs are priced and allocated, with underwriters assessing derivative market signals as part of placement advice. Some asset managers argue that increased derivative activity can improve price discovery, while others see it as noise that complicates valuation assessments.
Rumors and chatter in trading rooms can feed momentum, but professionals stress that fundamental analysis of business models, balance sheets and competitive positioning remains essential for longer-term investors.
The growing role of perpetual futures in shaping pre-IPO dynamics raises questions about market structure and investor protection that exchanges, brokers and regulators will need to address to prevent destabilizing episodes. As of August 21, 2026, traders and officials say the trend is unlikely to disappear, but its future impact will depend on policy responses and the behavior of leverage-seeking participants.
