EL7.AI
StocksMedium•27 October 2026•
3 min read

China’s STAR50 Index Falls 40%, Erasing $480 Billion in Market Value

Key Facts

1The STAR50 Index fell 40% in less than four months, wiping out about $480 billion in market value.
2The broader index of Chinese blue-chip shares fell about 20% from its June highs.
3AI stocks account for 42% of China’s market capitalization and 57% of trading in A-shares and H-shares.
4The STAR50’s forward price-to-earnings ratio stood at about 100 times, compared with about 30 times for the Nasdaq 100.

China’s STAR50 Index, which includes prominent artificial intelligence and semiconductor companies, fell 40% in less than four months through October 26, wiping out about $480 billion in market value, according to a Reuters report. The selloff extended beyond technology stocks, with a broader index of Chinese blue-chip shares down about 20% from its June highs. Reuters said the decline was not linked to a single clear catalyst. Beijing-based fund manager Dong Baozhen said the market "later turned into a wild speculative rally," adding: "Now we are seeing the bubble burst." The losses have put AI stocks, which have become a large part of the Chinese market, at the center of the retreat.

High valuations, tax bills and the threat that the United States or other countries could ban the use of Chinese equipment in data centers contributed to the selling, according to traders cited by Reuters. The move comes as AI stocks account for 42% of China’s market capitalization and 57% of trading across mainland-listed A-shares and Hong Kong-listed H-shares, according to a Goldman Sachs estimate cited by Reuters. That weighting means declines in these stocks have a pronounced effect on market indexes and trading activity. The STAR50’s forward price-to-earnings ratio remained at about 100 times, after reaching nearly 250 times. By comparison, the Nasdaq 100’s multiple was about 30 times, Reuters reported, highlighting the widening valuation gap between the indexes.

The pressure spread to individual companies. Shares of optical-component manufacturers Zhongji Innolight and Eoptolink Technology fell about 60% from highs reached in June and July, partly as Washington moved to prevent the companies from supplying products to U.S. data centers, according to Reuters. Shares of robotics maker Unitree have halved since trading began in August, despite its offering attracting retail investor demand that exceeded supply 8000 times. Shares of semiconductor company CXMT also lost more than a quarter of their value in the month before Reuters’ report. These moves show the selloff spanned companies in AI, robotics and chips, amid valuation concerns and risks to access to the U.S. market.

In industrial activity data, China’s official purchasing managers’ index stood at 50.1% in September, up 0.3 percentage points from the previous month and back in expansion territory. Performance varied by company size: large companies registered 50.6, compared with 49.7 for medium-sized companies and 48.9 for small companies, which remained below the expansion threshold. The figures offer a mixed picture of the economy, with the overall index improving while readings for medium-sized and small companies remained weak.

China Securities Regulatory Commission Chairman Wu Qing met with market participants earlier in October to hear proposals for improving capital markets, the regulator said on its website. Hong Hao, investment director at Lotus Asset Management, said what is happening "will deter many companies seeking to list." The National Bureau of Statistics is scheduled to release its monthly purchasing managers’ index report on October 31 at 9:30 local time. The economic calendar lists the Caixin manufacturing purchasing managers’ index for November 2, 2026, with a previous reading of 52.1 points in September. Markets are watching both dates for signs of industrial activity after the technology-stock selloff.