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Goldman says AI is 42% of value and 57% of turnover; CSI 300 fell into a bear market on October 22.
Mainland Chinese shares have shed about $2.4 trillion in value since May, the report says, as China AI stocks drive market swings more than any other sector. The losses coincide with investors questioning whether Beijing’s AI push will deliver profits.
AI weight pulls broader China indices lower
Goldman Sachs estimates AI-linked companies account for 42% of the market value of Chinese stocks listed on the mainland and in Hong Kong, and 57% of trading. With that share of value and turnover, weakness in AI names reaches the main indices quickly. The report adds that the $2.4 trillion decline exceeds the annual output of South Korea’s economy.
The CSI 300, which tracks 300 large mainland companies, entered a bear market on October 22, defined as a fall of at least 20% from its peak, according to the report.
STAR 50 multiple still far above Nasdaq 100
The heaviest hit has been Shanghai’s STAR 50, an index of large technology and chip makers. It fell 40% in less than four months, erasing about $480 billion, the report says. Despite that, it trades near 100 times earnings, down from nearly 250 at the peak. Set against the Nasdaq 100’s multiple of around 30, that puts the STAR 50 at roughly 3.3 times the U.S. tech benchmark on this measure.
The report says analysts cite weak consumer spending in China and doubts that AI firms can earn back their investment. A recent example of froth comes from robot maker Unitree, which drew retail orders for 8,000 times the shares on offer at its August listing; the stock has since lost almost half its value even after a recovery this week, according to the report.
“The stock market later evolved into a speculative crazy bull,” said Beijing-based fund manager Dong Baozhen. “And now we see the bubble bursting.”
Policy and trade measures are part of the backdrop the report describes: the U.S. Federal Communications Commission banned imports of new foreign-made humanoid robots in July on national security grounds, and Washington is moving to bar Chinese-made optical parts from U.S. data centers. The report says Zhongji Innolight and Eoptolink are about 60% below their peaks.
The flow and valuation data show scale and where damage is concentrated, not whether AI leaders are generating earnings to support current prices. Clear, dated revenue and profit disclosures from the largest AI firms would most change this picture.
Source: Decrypt.
This article was written with AI assistance and reviewed by an editor.
This content is for informational purposes only and does not constitute financial advice.
🧠 HafidWatch Take
The steep decline in STAR 50’s valuation highlights how sensitive China’s tech sector remains to both domestic demand and regulatory actions. With some AI firms yet to provide clear revenue and profit data, investor confidence may not recover until these companies demonstrate tangible earnings. Meanwhile, continuing U.S. trade restrictions could further weigh on valuations, particularly for hardware-related stocks, suggesting that the market’s rebound will depend heavily on policy developments and clearer financial transparency from AI leaders.
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