China's STAR 50 AI index falls 40%, erasing $480 billion

Shanghai's STAR 50 index, which tracks China's biggest listed AI and semiconductor names, has fallen about 40% in under four months and wiped out roughly $480 billion in market value, Reuters reported on October 26.

"The stock market later evolved into a speculative crazy bull," Beijing-based fund manager Dong Baozhen told Reuters. "And now we see the bubble bursting."

Even after the slide, the STAR 50 trades at around 100 times trailing earnings. At its peak it reached nearly 250 times. The Nasdaq 100, by comparison, sits near 30. Goldman Sachs puts AI-related stocks at 42% of the combined market capitalisation of mainland and Hong Kong-listed Chinese equities and 57% of turnover, which is why the sector's reversal has pulled the blue-chip CSI 300 roughly 20% below its June high.

The individual damage is specific. Robot maker Unitree, whose August IPO was oversubscribed 8,000 times by retail buyers, has halved since its debut. GPU makers MetaX and Moore Threads have each roughly halved since July. Reuters flags stretched valuations, looming tax bills, and the risk that the United States and others ban Chinese equipment from data centres as the factors traders point to; no single trigger has been named.

Four of the analysts we track in our Who's Who directory shared the piece the day it ran.