Global AI Trade Cools Down, Chinese Tech Stocks Emerge as Biggest Losers
nashnova research
The Star50 index fell nearly 40% over the half, making it the worst-performing major tech benchmark globally; foreign investors pulled a net ¥90 billion via Stock Connect in Q3, turning sky-high valuations from a tailwind into a drag.
How bad is the damage — and who got hit hardest?
The Star50 index dropped nearly 40% this half; the ChiNext composite fell 36% — both the steepest declines among major global tech benchmarks.
This means → the same AI-cooling wave hit Nasdaq and Korea, but China's A-shares absorbed the hardest blow.
In the first half, Star50 had surged roughly 75%, with its forward P/E — the price divided by next year's expected earnings — briefly topping 80×. In plain terms = what climbed fastest also fell furthest.
Why did foreign money leave?
Between April and June, offshore capital poured in, betting on Beijing's policy support and the global AI upcycle.
In Q3 the tide reversed: foreign investors pulled a net ¥90 billion (≈$13.5 billion) through Stock Connect, erasing more than half of Q2's net inflows.
This means → the concentrated Q2 inflow created a lopsided ownership structure; once sentiment turned, selling pressure hit harder than in other markets.
Which stocks were hurt the most?
Chip makers Moore Threads and Muxi Integrated Circuit both saw their share prices halved from their peaks.
CXMT, a memory-chip firm that listed in July, fell 27% from its post-IPO high; robotics company Unitree, which listed in August, dropped roughly 50%.
This reflects a sharp markdown of earnings expectations across AI hardware and robotics — the later a company listed and the higher its valuation, the steeper the pullback.
Why does heavy reliance on equity financing matter?
Gavekal Capital portfolio manager Leonid Mironov noted that equity issuance is the "default funding channel" for China's AI firms, partly because their cost of issuing debt in global bond markets is high.
A-share IPOs have raised a combined $37 billion this year, a three-year high; tech companies account for more than a third of that total.
This means → if share prices stay depressed, the funding pipeline narrows. In plain terms = when stock prices are weak, the IPO route stops working.
Is the sell-off over? Where is the disagreement?
After this drawdown, Star50's forward P/E still exceeds 40× — far above Korea's Kospi at under 5× and the Nasdaq-100 at 21×.
GAM fund manager Jian Shi Cortesi said: "This is a technical correction, not a value entry. For many high-potential tech names, a further 30–50% decline is needed for genuine undervaluation."
This means → even after a 40% drop, Star50 valuations are still not cheap when measured against global peers.
What comes next?
Chinese financial regulators have held meetings to discuss market-stabilization measures and ordered the "national team" to accelerate share purchases.
The upcoming Q3 earnings season is the key test — whether companies can deliver on profits will determine if current valuations look "expensive" or "fair."
In plain terms = policy backstops can slow the descent, but a real floor requires the companies themselves to earn the money.
市场有风险，内容仅供研究参考，不构成投资建议。