China’s A.I. Stocks Have Lost 40 Percent in Four Months
Trending Topics Jakob Steinschaden
China’s A.I. stock boom just gave back nearly 40% in four months. Billions vanished fast, and the selling is hitting the market’s hottest names.
Based on reporting by Trending Topics, Jakob Steinschaden — read the original for the full story.
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China’s A.I. trade has gone from darling to cautionary tale. The STAR 50 index, which follows leading A.I. and chip stocks on Shanghai’s tech board, has dropped nearly 40 percent from its July peak, wiping out about $480 billion in market value in less than four months, according to Reuters. On Monday, it closed at 1,315.50 points.
The damage has been especially ugly in the names investors were most excited about. Unitree, the humanoid robot maker, has lost about half its value since its August market debut. CXMT is down more than 25 percent in the past month alone. MetaX and Moore Threads, the GPU makers often cast as China’s answer to Nvidia, have also roughly halved since July. Zhongji Innolight and Eoptolink, which make optical modules for data centers, are trading about 60 percent below their summer highs.
This isn’t just a China-only wobble, but China is taking the hardest hit. The Nasdaq is only about 6 percent below the record high it set three weeks ago. China’s CSI 300 has fallen about 20 percent since June. So the gap between the two markets is getting harder to ignore.
There’s no single culprit, which usually means the unwind has been building for a while. Valuations were extreme: the STAR 50 once traded at a price-to-earnings ratio of about 250 and is still around 100 after the selloff, versus about 30 for the Nasdaq 100. Beijing also tightened the screws in early October with guidelines meant to stop bubbles in “new productive forces,” a category that includes A.I., while curbs on leveraged and high-frequency trading added more pressure. Investors are also worried the U.S. could ban Chinese-made data center equipment.
The concentration is startling too. Goldman Sachs says A.I.-related stocks now account for 42 percent of China’s total stock market capitalization and 57 percent of trading volume. That kind of crowding is great right up until it isn’t. For Beijing, the awkward part is that the crash is hammering retail investors just as it wants households to put more savings into stocks.
My take — AI-written commentary, not fact-checked reporting
This is what happens when a theme stock market stops pretending it’s investing and starts behaving like a stampede. Beijing tried to cool things down, but bubbles rarely appreciate the warning label. The real tell is that the sector became so crowded it started to drag the whole market with it.
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