Reuters Says China’s STAR50 Index of AI and Chip Leaders Has Fallen 40% in Under Four Months, Erasing About $480 Billion, With No Obvious Trigger
Reuters reported on October 26 that China's STAR50 index of AI and semiconductor leaders has fallen 40% in less than four months, erasing about $480 billion of market value. Reuters says there was no obvious selling trigger, though traders cited high prices, tax bills and the threat of foreign bans on Chinese equipment in data centres, and some fund managers and strategists still see buying opportunities. Reuters' analysis does not mention DeepSeek; one fund manager it quotes says the slump could stop many companies trying to list.
China's AI stock slump matters most for the companies that have not listed yet. Reuters reports a 40% fall in the STAR50 with no single trigger, and one fund manager it quotes expects the selloff to stall new listings. That lands on a pipeline Times of AI has been tracking: Moonshot AI closed its final private round at about $50 billion ahead of a Hong Kong IPO targeted for early 2027, and DeepSeek was raising at a targeted valuation of about 500 billion yuan, Bloomberg reported this month.
What Reuters reports#
Reuters says the STAR50 index, which it describes as covering the mainland's AI and semiconductor leaders, has fallen 40% in less than four months, removing about $480 billion in market value. It says China's broad blue-chip index is down about 20% from its June highs, while US AI stocks have led a 6% drawdown in the Nasdaq from a record set three weeks earlier. Citing Goldman Sachs, Reuters says AI stocks make up 42% of China's market capitalization and 57% of turnover across mainland A-shares and Hong Kong H-shares.
Reuters gives several examples. Shares in robot-maker Unitree, which it says was 8,000 times oversubscribed by retail buyers at listing, have halved since trading began in August. It says chipmaker CXMT has lost more than a quarter of its value in the past month, MetaX Integrated Circuits and Moore Threads Technology have halved since July, and optical-parts makers Zhongji Innolight and Eoptolink Technology are down roughly 60% from June and July highs, in part as Washington moves toward banning them from supplying US data centres.
On valuation, Reuters says the STAR50 trades at around 100 times trailing earnings, down from a high of nearly 250, against a multiple of 30 for the Nasdaq 100. It quotes Beijing-based fund manager Dong Baozhen as saying "now we see the bubble bursting."
Views on what comes next#
Reuters quotes Hong Hao, managing partner and chief investment officer at Lotus Asset Management in Hong Kong, saying the selloff "is now going to put a stop for many of the companies trying to get themselves listed." It also says investor frustration is likely to slow equity fundraising by tech firms. The analysis does not mention DeepSeek, which Reuters reported in September had hired CITIC Securities to prepare for a possible STAR Market listing, as our report on DeepSeek's latest round noted. If Hong Hao is right, DeepSeek would be preparing to list on the board that has fallen furthest.
Not everyone reads the slump as a collapse. Reuters says Asia funds are overweight China overall, according to HSBC research, even though they have been sellers over the past three months. It says Goldman Sachs has Innolight and CXMT on a recommendation list it published earlier this month, and that BNP Paribas Securities strategist William Bratton has said the market offers buying opportunities for the careful. Others quoted by Reuters are waiting for lower valuations; fund manager Wang Zhuo says "all bubbles inevitably burst."
Reuters also says state-backed investors were sellers into rallies to keep gains in check, and that the China Securities Regulatory Commission did not immediately reply to its questions.
Limits#
- The 40% fall, the $480 billion figure and the market-share and valuation numbers are Reuters' or come from sources it cites, as republished by Investing.com.
- Reuters reports no single cause. The reasons above are what traders and investors told it.
- Neither DeepSeek nor Moonshot has commented on whether the slump changes its listing plans. The link between the two is our reading, not a company statement.