SHANGHAI – China’s massive AI investment frenzy turned into bruising market retreat, wiping out around $480 billion from STAR50’s constituent companies during months-long slide and leaving investors questioning whether the sector’s soaring prices ever matched its earnings potential.
Selling intensified this week as Shanghai’s technology-focused STAR50 index closed at 1,228.09, down 4.27%, reversing the previous session’s recovery. The broader CSI 300 fell 1.03% to 4,041.84. China’s blue-chip CSI 300 had dropped approximately 20% from its June peak, underscoring how the damage had spread beyond speculative technology shares.
Latest market Stats
| Index | Latest reading | Change |
| Shanghai STAR50 | 1,228.09 | −4.27% |
| CSI 300 | 4,041.84 | −1.03% |
| Shanghai Composite | — | −0.9% |
| ChiNext Composite | — | −3.6% |
| CSI 5G Communications | — | −6.1% |
| Hong Kong Hang Seng | — | +0.1% |
| Nasdaq Composite | 26,549.85 | +0.27% |
The fresh dip erased previous respite. STAR50 gained 2.45% on October 28 after losing 4.81% the day before. The $480 billion loss estimate relates to the downturn reported on October 26 and does not represent an updated calculation following recent trading.
Top players suffer heavy losses
| Company | Reported reversal |
|---|---|
| Unitree | Shares halved after August listing |
| MetaX Integrated Circuits | halved since July |
| Moore Threads Technology | halved since July |
| Zhongji Innolight | 60% below June |
| Eoptolink Technology | 60% below June peak |
| CXMT | Lost over 25% |
Unitree’s retail offering attracted subscriptions around 8,000 times the available allocation. MetaX and Moore Threads had surged approximately 700% and 400%, respectively, on their market debuts the previous year, illustrating the speculative enthusiasm that preceded the reversal.
Fresh earnings added to the pressure on Unitree on Thursday. Its shares fell 4.3% in morning trading after its first post-listing quarterly report showed declining net profit despite revenue growth of 70% from a year earlier.
No single shock explains the wider retreat. Expensive valuations, tax considerations and the prospect of restrictions on Chinese equipment in overseas data centres have contributed to investor unease. Optical component suppliers face particular exposure to Washington’s policy decisions, given their substantial overseas business and links to the data centre supply chain.
Despite the earlier correction, STAR50 was still trading around 100 times trailing earnings, compared with nearly 250 times at its peak and approximately 30 times for the Nasdaq 100.
The downturn threatens to complicate Beijing’s effort to channel household savings into technology investment. Falling prices can weaken demand for new listings and make fundraising harder, even as China continues pursuing semiconductor development, domestic AI capabilities and technological self-reliance.
