China’s mainland-listed shares are on track to enter a bear market, dragged down by the lack of substantial fiscal stimulus and earnings disappointment. The CSI 300 Index fell as much as 1.7% on Thursday, bringing its total losses from a high in June to 20%. Optical firms Eoptolink Technology Inc. and Zhongji Innolight Co. were among the top losers. A gauge of major Chinese companies listed in Hong Kong dropped as much as 3%.
Local shares have been in a slump since late June, first succumbing to a global selloff in AI-linked names before languishing further on new evidence of a protracted consumption slump. Policymakers have stuck with targeted and incremental stimulus measures, disappointing traders expecting a 2024-style big package. Contemporary Amperex Technology Co. Ltd. reported slower-than-expected quarterly profit growth as policy support wound down, sending its shares down 12% on Wednesday.
“Investor sentiment remains very poor for China’s onshore and offshore markets, and without new policy or tech catalysts, this kind of volatile, directionless environment may persist into early 2027,” said Homin Lee, senior macro strategist at Lombard Odier in Singapore. Chinese firms have emerged as among the biggest losers of the faltering global AI trade as scrutiny over future demand and earnings prospects intensifies.
The Nasdaq-style Star50 Index has tumbled about 40% in the current half year, while the Chi Next index, similarly focused on hardware stocks, has declined by a similar measure. Mixed results from US megacaps have cast doubt on the durability of the AI rally as investors grow more discerning over valuations amid rising borrowing costs.
Authorities have moved to curb selling pressure and stabilize its equity market, though analysts said state-backed buying alone may not be enough to enable a sustained recovery.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing