While global stock markets are still reeling, China has already seen a collapse. Concerns about weak demand for artificial intelligence and new export restrictions have sent mainland China's high-tech STAR50 index down 40% in just four months. Total losses are estimated at $480 billion.
While global stock markets are still reeling, China has already seen a collapse. Concerns about weak demand for artificial intelligence and new export restrictions have sent mainland China's high-tech STAR50 index down 40% in just four months. Total losses are estimated at $480 billion.
The fall halted a two-year rally and jeopardized Beijing's plans to create a stable "slow" market to finance the tech boom. China's CSI 300 blue-chip index (which covers the country's 300 largest companies) is down about 20% from its June peaks, Reuters reported .
“The stock market has become a speculative race,” says Beijing-based fund manager Dong Baozhen. “And now we are watching this bubble burst.”
Unlike the US, where the Nasdaq index has retreated only 6% from its peak, the Chinese market has fallen much more painfully. There was no specific trigger for the sell-off, but investors point to a combination of factors: inflated prices, tax liabilities and the threat of new US bans on the use of Chinese equipment in global data centers.
Since AI companies accounted for up to 42% of market capitalization and over 50% of trading volume, a huge number of small investors were affected by the fall.
Unitree (robot manufacturer): shares have halved in price since the August listing.
CXMT (chip manufacturer): lost over 25% of its value in the last month alone.
MetaX and Moore Threads: After a 400–700% jump last year, their shares have halved since July.
Zhongji Innolight and Eoptolink: optical component developers lost about 60% due to the risk of falling under Washington sanctions.
Despite the deep correction, the STAR50 index is still trading at a P/E (price/earnings) ratio of around 100, which is significantly more expensive than the American Nasdaq 100, where this figure is around 30. Analysts fear that the decline has not yet reached its bottom, and the process of new IT companies going public (IPO) will actually freeze.
At the same time, some international analysts (including Goldman Sachs and BNP Paribas) believe that the current sell-off creates opportunities for spot purchases. However, local investors remain skeptical.
“Like any other Chinese manufacturers, chip and AI developers will eventually get involved in a price war,” concluded Wang Zhou, managing director of Shanghai Zhuozhu Investment Management. “There are no exceptions. All bubbles inevitably burst.”
