China’s artificial intelligence stocks have fallen sharply in recent months. The STAR50 index, home to many of the country’s AI and chip leaders, is down 40% from its July high.
The drop took place in less than four months. It erased about $480 billion in market value, according to Reuters.
China’s broader blue-chip index, the CSI300, has fallen about 20% from highs reached in June. In comparison, the Nasdaq in the US is down about 6% from a record high set three weeks ago.
Retail Investors Hit by Falling AI Stocks
Traders pointed to high prices, tax bills, and the threat of foreign bans on Chinese data centre equipment. There was no single clear trigger for the selling.
AI stocks make up 42% of China’s market value and 57% of trading across mainland and Hong Kong shares, according to Goldman Sachs. Many small investors have taken losses.
Robot maker Unitree, which was 8,000 times oversubscribed by retail buyers at its listing, has seen its shares halve since August. Chipmaker CXMT has lost more than a quarter of its value in the past month.
Chipmakers MetaX Integrated Circuits and Moore Threads Technology have also halved since July. Optical parts makers Zhongji Innolight and Eoptolink Technology are down about 60% from their summer highs, partly as Washington moves to ban them from supplying US data centres.
The STAR50 still trades at around 100 times trailing earnings, down from nearly 250. The Nasdaq 100 trades at about 30 times.
“What’s happening is now going to put a stop for many of the companies trying to get themselves listed,” said Hong Hao of Lotus Asset Management.
Some firms see buying chances. Goldman Sachs placed Innolight and CXMT on a recommendation list this month, and BNP Paribas strategist William Bratton said the market offers opportunities for careful buyers.
Beijing Drafts New AI Export Rules
At the same time, China has proposed new export controls on AI technology. The draft rules were released on October 16.
The plan would add 23 AI-related technologies to a list of restricted or banned exports. These include advanced models, AI agents, chip design technology, and methods for running computing centres with more than 10,000 AI chips.
Foreign users could still access Chinese AI through websites and cloud platforms. However, some transfers of the underlying technology overseas would need government approval.
Firms such as DeepSeek, Moonshot, and Z.AI offer models to overseas customers. Some Chinese developers also use overseas data centres to reach advanced chips that US rules block from China.
The draft lists three tests for which models are covered. These are training compute of 10 to the power of 26 calculations, a size of at least 2 trillion parameters, or a top 10 world ranking in certain assessments.
Lawyers and researchers say companies want clearer guidance. One concern is whether labs can train or run top models on foreign-owned servers abroad.
A temporary rule requiring registration of certain technology transfers took effect on October 16. Law firm Fangda said this covers deals that put Chinese technology under foreign ownership, including some already underway.
The proposals are open for public comment until November 15. A source told Reuters that China is expected to adopt the rules by the end of the year.
