China’s STAR50 Selloff Sheds $480 Billion in Market Value

China’s technology-focused STAR50 shed about 40% in less than four months, losing roughly $480 billion in market value and raising a potential fundraising risk for AI companies.

The STAR50 tracks companies listed on Shanghai’s technology-focused STAR Market. The index traded at about 100 times trailing earnings, down from nearly 250 times at its peak. The Nasdaq 100 was at about 30 times earnings in the comparison.

The decline extended beyond technology stocks. The CSI 300, which tracks 300 large and liquid A-share stocks, had fallen more than 20% from its June peak by Oct. 22, crossing the conventional threshold for a bear market.

Beijing has encouraged savers to invest in stocks to help finance the AI industry. The decline could complicate equity fundraising for AI companies.

Hong Hao of Lotus Asset Management forecast that the downturn would halt listing preparations at many companies. Beijing-based fund manager Dong Baozhen described the earlier rally as speculative: “The stock market later evolved into a speculative crazy bull. And now we see the bubble bursting.”