Zhipu's 1,500% Rally vs. MiniMax's Slump: Inside the China AI Pair Trade

Hong Kong's stock market is seeing a new kind of trade: a pair trade pitting two Chinese AI startups against each other. Since late March, Zhipu shares have surged 170%, while MiniMax has fallen about 50%. Both companies have risen since their January IPOs, but Zhipu's year-to-date gain exceeds 1,500% — leaving its rival in the dust. As global AI companies accelerate their listings, investors are scrutinizing profitability more closely, and the money is flowing to the winners.

HSBC estimates that 65% of MiniMax shares will unlock on July 8, compared to just 6% for Zhipu on July 7. That massive lockup disparity gives short sellers plenty of ammunition, and analysts expect the pair trade to accelerate in early July.

Performance and model quality are the main drivers. Zhipu has managed to raise prices on its GLM model while maintaining sales volume. MiniMax, on the other hand, cut the price of its flagship M3 model by 50% just a week after launch — a move that sparked profitability concerns. Goldman Sachs cut its MiniMax target price by 14%, while JPMorgan raised Zhipu's target and downgraded MiniMax, saying the price cut reflects weaker-than-expected competitiveness. Gavekal Capital notes that Zhipu has a better model and stronger earnings potential, making it hard for MiniMax to become the dominant platform.

Geopolitics is also playing a role. US restrictions on Anthropic's model exports have pushed capital toward Chinese firms. Zhipu released its latest open-source model this week, sending shares up over 70%. Bank of America initiated coverage on both stocks with Buy ratings, expecting MiniMax to catch up after its lockup expires. But both companies still face low-price competition from DeepSeek and potential capital diversion from upcoming IPOs like Moonshot AI.