China AI stocks fall: the STAR50 index is down about 40%

What happened. Reuters reports that the STAR50 index, which holds AI and semiconductor leaders on the mainland market, fell 40% in under four months from its July high. Market value dropped by about $480 billion. The broad CSI300 index lost about 20% from its June highs. The Guardian says the STAR50 is down 40% since June and cites Bloomberg: $2.4 trillion has been wiped from Chinese stock markets since May. These are different measures, so the sums cannot be compared directly.

Which stocks. Reuters gives several examples. Shares in robot maker Unitree have halved since they started trading in August. Chipmaker CXMT lost more than a quarter of its value in the past month. Chipmakers MetaX Integrated Circuits and Moore Threads Technology have halved since July. Zhongji Innolight and Eoptolink Technology, makers of optical parts, are down roughly 60% from their June and July highs. Part of the reason is that Washington is moving towards banning them from supplying US data centres.

Why they are falling. Reuters says there was no obvious selling trigger. Traders named high prices, tax bills and the threat that the US or other nations ban Chinese equipment in data centres. The STAR50 trades at about 100 times trailing earnings, down from a high of nearly 250. The Nasdaq 100's multiple is 30. The Guardian adds comments from Dan Wang of Eurasia Group: profit margins are below expectations this year, US rates are rising and China's domestic demand is weak. Demand for robots, the paper says, comes mostly from government agencies and research institutions, not everyday buyers.

Scale for the market. According to Goldman Sachs, AI stocks make up 42% of China's market capitalisation and 57% of turnover across mainland A-shares and Hong Kong H-shares. The Guardian says AI stocks are over 40% of market value in China and Hong Kong. Reuters notes the market is dominated by small investors, so the pain has spread widely. The slump may slow fundraising and new listings by tech firms.

What different sides say. Some investors see value in the selloff: Reuters quotes a BNP Paribas Securities strategist saying the market offers buying opportunities for the careful, and Goldman Sachs has Innolight and CXMT on its revamped recommendation list. Others want even lower valuations first. For comparison, the Nasdaq is down 6% from a record set three weeks ago.

Keep in mind. The sources differ on the date of the peak (June or July) and on the size of the losses, because they measure different things. Different stocks fell by different amounts. This is not advice to buy or sell.

Confirmed facts

• The STAR50 index fell 40%: in under four months from its July high, per Reuters; since June, per The Guardian.^[1][2]
• Reuters estimates the STAR50 slide wiped out about $480 billion of market value.^[1]
• The CSI300 index is down about 20% from its June highs.^[1]
• Per Bloomberg, cited by The Guardian, $2.4 trillion has been wiped from Chinese stock markets since May.^[2]
• Per Goldman Sachs, AI stocks are 42% of China's market value and 57% of turnover across A-shares and H-shares (Reuters); The Guardian says over 40% of market value in China and Hong Kong.^[1][2]
• Unitree shares have halved since they started trading in August.^[1][2]
• CXMT lost more than a quarter of its value in the past month; MetaX Integrated Circuits and Moore Threads Technology have halved since July.^[1]
• Zhongji Innolight and Eoptolink Technology are down roughly 60% from June and July highs, in part as Washington moves towards banning them from supplying US data centres.^[1]
• Reuters says there was no obvious selling trigger; traders named high prices, tax bills and the threat of bans on Chinese equipment in data centres.^[1]
• The STAR50 trades at about 100 times trailing earnings, down from nearly 250 at its high; the Nasdaq 100's multiple is 30.^[1]
• The Nasdaq is down 6% from a record set three weeks ago.^[1]
• Dan Wang of Eurasia Group cited profit margins below expectations, rising US rates and weak domestic demand in China.^[2]
• The US has banned humanoid robots from China and is thought to be considering a ban on Chinese components in data centres.^[2]
• A 60 billion yuan state-backed AI investment fund started putting money into domestic developers this month.^[2]

Implications

• ConfirmedWorries about profits, demand and US bans are weighing on Chinese AI stocks together, not for a single reason.
• ConfirmedBecause AI stocks are a large share of the market (42% of value per Goldman Sachs), their fall affects the whole Chinese market.
• Our readingThe slump may slow fundraising and new listings by tech firms.

Still unknown

• What will trigger the next move: the sources name no clear trigger for the selloff.
• Whether new stimulus will come: The Guardian says none is expected during a politically sensitive period.
• Whether the US will ban Chinese data centre components: it is only being considered.

Who it affects

China, United States, Worldwide. People who follow China AI stocks, Asian markets and the tech sector

Sources

1. Reuters: In China, the AI bubble has already burst October 26, 2026 · media
2. The Guardian: Chinese markets lose trillions as race for AI supremacy with US takes its toll October 27, 2026 · media