Major Loss in Chinese AI Stocks: $480 Billion Wiped Out

The sharp decline in artificial intelligence and semiconductor-focused technology stocks on Chinese stock exchanges has caused the loss of approximately $480 billion in market value in less than four months.

Losses in Indices and Market Weight

The STAR50 index, which is heavily weighted toward artificial intelligence and semiconductor companies, has fallen 40% since its peak in July. The CSI300 index, which covers China's large-cap companies, has also lost approximately 20% of its value since June. This decline in Chinese markets has been much sharper compared to the US Nasdaq index, which lost 6% in the same period.

According to Goldman Sachs data, AI stocks account for 42% of the total market value and 57% of the total trading volume of stocks traded in mainland China and Hong Kong. This high weighting increases the impact of the sell-off in the technology sector on the overall market.

Company Valuations and US Restrictions

Companies that recently went public have also been affected by the sell-off. Shares of robot manufacturer Unitree have lost 50% of their value since their IPO in August, while chipmaker CXMT has fallen more than 25% in the last month. Losses for optical component manufacturers Zhongji Innolight and Eoptolink have approached 60% from their peak levels.

In addition to high company valuations, US export restrictions on Chinese technology companies and attempts to block product supply to American data centers have been influential in the decline. Although the price-to-earnings ratio of the STAR50 index has fallen from 250 to 100, it remains under high valuation pressure compared to the Nasdaq 100 index, which is at 30.

Regulatory Measures and Investor Outlook

The Beijing administration has introduced new measures targeting leveraged transactions and high-frequency trading to ensure stability in the market. It is stated that state-backed investors are also selling shares during periods of rise to limit price movements. This situation makes the goals of directing savers to the stock market difficult.

Some investors view this decline as an opportunity in terms of market reforms. While institutions such as HSBC and Goldman Sachs continue to keep some Chinese AI companies on their investment lists, some local investors are waiting for valuations to fall further before buying again.