China’s AI and Chip Stocks Lose About $480 Billion as STAR50 Index Falls 40%
- 30th October 2026
- 01:00 PM
- 3 min read
Summary
China’s artificial intelligence (AI) and semiconductor stocks have lost about $480 billion in market value, ending a two-year rally. The STAR50 index has fallen 40% in less than four months, and the broader CSI300 has dropped about 20% from its June highs. High valuations, concerns over AI demand, tax bills and restrictions on Chinese exports have driven the sell-off.Mumbai | October 30, 2026
China’s AI and semiconductor stocks have lost about $480 billion in market value as high valuations meet concerns over AI demand and restrictions on Chinese exports.
The sell-off has brought a two-year rally to an abrupt halt. It has also set back Beijing’s efforts to build a “slow bull” market that delivers more reliable returns.
How Far Have China’s AI Stocks Fallen?
The STAR50 index, which tracks 50 major technology companies listed on the Shanghai Stock Exchange (SSE), has fallen 40% from its July high in less than four months. The broader CSI300 blue-chip index has dropped about 20% from its June highs. Several of the sector’s best-known stocks have lost half their value or more.
| Company | Fall | Period |
| CXMT (chipmaker) | More than a quarter | Past month |
| MetaX Integrated Circuits | Half its value | Since July |
| Moore Threads Technology | Half its value | Since July |
| Zhongji Innolight | Roughly 60% | From June and July highs |
| Eoptolink Technology | Roughly 60% | From June and July highs |
- MetaX and Moore Threads surged 700% and 400% respectively on their market debuts last year.
- Zhongji Innolight and Eoptolink, both optical component makers, fell partly as Washington moves towards banning them from supplying US data centres.
How Did Chinese Markets Trade on October 30?
Mainland China’s main indices fell on October 30, while Hong Kong’s market rose. The SSE Composite Index closed at 3,599.02, down 1.44%. The CSI300 closed at 3,985.50, down 1.39%. Hong Kong’s Hang Seng Index rose 1.46% to 23,294.42.
| Index | Close | Change (points) | Change (%) |
| SSE Composite | 3,599.02 | -52.42 | -1.44% |
| CSI300 | 3,985.50 | -56.34 | -1.39% |
| Hang Seng | 23,294.42 | +335.77 | +1.46% |
What Caused the Sell-off in Chinese AI Stocks?
No single trigger caused the reversal. Traders cited expensive valuations, tax bills and the threat of the United States (US) and other countries banning Chinese equipment from data centres. The rally had pushed Chinese technology valuations above those in Western markets and elsewhere in Asia.
AI stocks made up a large share of China’s market:
- 42% of China’s market capitalisation, or total stock market value
- 57% of turnover across mainland-listed A-shares and Hong Kong-listed H-shares
The correction has also raised concerns about competition among Chinese manufacturers.
Are Chinese AI Stocks Still Expensive?
Valuations remain high despite the correction. The STAR50 index trades at around 100 times trailing earnings, which are profits over the past 12 months. That is down from a peak of nearly 250 times. By comparison, the Nasdaq 100 trades at about 30 times earnings.
Outlook
The valuation gap has raised concerns that the sell-off may have further to run. The fallout could also slow fundraising by technology companies, as investors reassess the risks of backing businesses linked to Beijing’s technology ambitions. Many mainland investors are turning to other sectors or waiting for valuations to fall further before buying again.
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