3 publishers · first seen Wed, 28 Oct 2026 12:44 UTC · updated Thu, 29 Oct 2026 15:00 UTC
Chinese AI and technology stocks have fallen more than 40 per cent over four months, wiping out US$480 billion in market value, as the STAR 50 Index declined sharply from its peak. The sell-off has raised concerns about valuations and profitability, with analysts noting that AI-related stocks accounted for about 42 per cent of market capitalisation and 57 per cent of trading activity in mainland and Hong Kong-listed shares. Despite the downturn, analysts say it does not necessarily signal a setback for China’s broader AI ambitions, which continue to receive government support.
The correction is seen as a repricing of expectations, with scrutiny increasing over monetisation, capital efficiency, and demand for AI services. While fundraising may become harder for cash-burning firms, strategically important companies are expected to remain supported. Elevated valuations persist, with the STAR 50 still trading at around 100 times earnings as of Oct 26, down from nearly 250 times at its peak.
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