China's blue chips slump to 15-month lows as AI stocks slide

Chinese stocks crumbled to 15-month lows on Thursday as AI shares nosedived over fears that growth and valuations are unsustainable.

The CSI300 Index dropped 1.8% to close at 4,036.30, its lowest ‌level since July 2025. The Shanghai Composite Index closed down 1.5%, also its lowest in more than a year. China's blue-chip CSI300 Index is now 20.2% below its most recent closing peak on June 22, meeting some definitions for a "bear market". By the most widely accepted definition of ‌the term, it has been in one ever since a 2007 closing-level high.

Shanghai's STAR Market, home to China's AI and chip-making leaders, ‌is down 40% from July highs. "The market is in the dump," said Hao Hong, managing partner and chief investment officer at Lotus Asset Management in Hong Kong.

A sweeping selloff in tech shares across Asia, along with tepid stimulus expectations and, some analysts said, tax bills coming due, has triggered a broad rush to sell in China. The ⁠CSI ​Semiconductor Index lost 3.6% and the CSI ⁠AI Index was down 3.3%.

On Thursday, consumer staples and utilities were the only sectors to gain. Market sentiment has also been hurt by disappointment over Beijing's piecemeal stimulus for ⁠a two-speed economy that is booming for exports but sputtering at home.

Stronger-than-expected third-quarter economic growth has further reduced expectations for additional policy support. HONG KONG WEIGHED ​BY TAX OVERHANG

In Hong Kong, the Hang Seng Index slipped 3% to a four-month low, while the Hang Seng Tech Index ⁠slid 5% to a two-year low. Some investors pointed to Beijing's campaign to chase income tax on offshore trusts, a popular structure adopted by many Hong Kong-listed Chinese companies' shareholders, ⁠as ​another source of selling pressure.

"It's the deadline to report how much tax they owe... Today is the last day they can file," said Lotus' Hong. Hong said the sale of shares by founders of Chinese companies had fuelled the selloff over the past few weeks.

Among ⁠the biggest losers on Thursday, Tencent slumped 2.9% and Alibaba dived more than 6%. "Such a sharp and rapid decline is very rare, ⁠especially for a market leader like Tencent. ⁠This is likely the last of the panic selling, with the market selloff nearing its end," said Zeng Wenkai, chief investment officer at Hong Kong-based Shengqi Capital.

"However, such painful wounds will take time to ‌heal."