Beijing is rushing to stabilize struggling stock markets as China's AI trade reverses amid slowing economic momentum. The CSI 300 index has entered a technical bear market, down 10% year-to-date and over 20% from a June peak. The contagion has spread to Hong Kong, where mainland Chinese investors have sold HK$20bn ($2.5bn) of stocks this month, marking the largest monthly outflows since July 2021.
Hong Kong's Hang Seng index has fallen over 12% year-to-date. Beijing has deployed its national team of state-aligned funds and brokers to buy Chinese stocks and dissuade domestic investors from fleeing. National team purchases of ETFs were the most aggressive since Trump's tariff announcement in April 2025. "National team buying aims to put a floor under the market," analysts wrote. "A sustained rally depends on a recovery in domestic demand." AI hardware stocks have been hardest hit.
The industrials sub-index is down 23%. CATL, the world's biggest battery maker, has fallen 37%. CXMT, China's largest DRam chip producer, is down 20% in the past month.
Policymakers provided a stimulus package in September 2024, but hopes have faded. Fiscal policy has turned contractionary, analysts say. Wealthy investors may be raising cash to pay tax bills on offshore trusts.
Source: Financial Times Markets · Summarized by HeadlinesBriefing