China's AI stock rout pushes Star50 down nearly 40% in first half

what happened

According to cnbctv18.com, the faltering global AI trade has hit Chinese companies hardest. In the first half, the Star50 index dropped almost 40%, becoming the weakest major tech gauge in the world. MetaX Integrated Circuits Shanghai and Moore Threads Technology each lost roughly half their value, while the hardware-focused ChiNext index fell 36%.

Over April to June the Star50 had outpaced even South Korea's KOSPI, rising 75%, and it peaked at 80 times forward earnings on June 30. It now trades near 40 times, versus under five times for KOSPI and 21 times for the Nasdaq 100. Bloomberg data shows outflows through the Hong Kong link reached $13.5 billion in the third quarter, erasing more than half of the April-June inflows.

Investors are growing wary of demand and earnings at companies that depend heavily on equity financing. CXMT's announcement of a memory chip competing with Samsung and SK Hynix triggered a global sell-off earlier this week, and Yushu Technology has fallen by half from its August high.

why it matters

For markets, this signals a repricing of AI themes in Asia. Weakness in the Star50 and ChiNext weighs on Chinese technology shares, while foreign capital leaving makes it harder for firms to raise money through IPOs and share sales. Gavekal Capital warns that prolonged weakness would make fundraising difficult for these companies.

market impact

Chinese tech stocks: capital outflows and AI valuation reset pressure the Star50 and ChiNext indices.

instruments