Chinese stocks turn biggest losers as global AI trade stumbles

Chinese technology stocks have been the biggest casualties of a global pullback in AI-related trade, with the Nasdaq-style Star50 index plunging nearly 40% in the past half year and the ChiNext index off about 36%. Major chipmakers such as MetaX Integrated Circuits Shanghai and Moore Threads have each lost roughly half their market value. That reverses a blistering April-June rally when the Star50 jumped about 75% and traded above 80 times forward earnings at its peak. The sell-off has hit recent listings too: memory-chip maker CXMT is down about 27% from its post-listing high and robotics firm Yushu has fallen roughly 50% since its August IPO, even as Chinese onshore IPOs raised about US$37 billion year-to-date, with tech accounting for over a third.

The downturn threatens funding for China’s AI push because many firms prefer equity over debt, making sustained market weakness a potential constraint on fundraising and a signal that investors doubt near-term technological progress. Foreign net outflows through the Hong Kong trading link reached an estimated 90 billion yuan in Q3, reversing much of the spring inflows. Regulators have convened meetings and urged state-backed “national team” purchases to stabilise markets, but investors warn valuations remain rich - Star50 still trades over 40 times forward earnings versus under five for Korea’s Kospi and 21 for the Nasdaq 100 - so further declines of 30-50% could be needed before buyers return.