China AI Index Loses $480B; Goldman Puts AI at 42% of Market

China’s STAR50 index of AI and semiconductor leaders has fallen 40% in less than four months, wiping out some $480 billion in market value, Reuters reported in an analysis on 26 October 2026. China’s broad blue-chip index has dropped about 20% from highs made in June, the report said.

AI stocks make up 42% of China’s market capitalisation and 57% of turnover across mainland-listed A-shares and Hong Kong’s H-shares, according to Goldman Sachs, as cited by Reuters. Reuters compared the fall with a 6% drawdown in the Nasdaq from a record high scaled three weeks earlier.

Business Pill · FINANCIAL CONDITIONS

A short explainer on financial conditions: several prices of money pulling at once. It teaches the general idea only and says nothing about China’s market or the companies in this piece.

Which Stocks Fell

Shares in robot-maker Unitree, which Reuters said was 8,000 times oversubscribed by retail buyers at listing, have halved since they started trading in August. Chipmaker CXMT has lost more than a quarter of its value in the past month, Reuters reported.

Chipmakers MetaX Integrated Circuits and Moore Threads Technology, which rose 700% and 400% on their market debuts last year, have also halved in value since July. Optical parts makers Zhongji Innolight and Eoptolink Technology are down roughly 60% from highs in June and July, in part as Washington moves towards banning them from supplying US data centres, according to Reuters.

Source: Reuters analysis, 26 October 2026. Reuters gave percentage moves, not share prices.

Why Traders Say It Happened

Reuters reported that there has been no obvious selling trigger. Traders said high prices, tax bills and the threat of the US or other nations banning Chinese equipment in data centres all contributed, according to the report.

The STAR50 index still trades at around 100 times trailing earnings, down from a high of nearly 250, Reuters reported, against a multiple of 30 for the Nasdaq 100. “The stock market later evolved into a speculative crazy bull,” Beijing-based fund manager Dong Baozhen told Reuters. “And now we see the bubble bursting.”

What It Means for Listings and Policy

“What’s happening is now going to put a stop for many of the companies trying to get themselves listed,” said Hong Hao, managing partner and chief investment officer at Lotus Asset Management in Hong Kong, according to Reuters. Reuters said the fall is a setback for Beijing’s efforts to steer household savings into stocks to fund the AI boom and to build a “slow bull” market.

Some see value in the selloff, Reuters reported. Goldman Sachs has Innolight and CXMT among dozens of Chinese AI stocks on a revamped recommendation list published earlier this month, and BNP Paribas Securities strategist William Bratton has said the market offers buying opportunities for the careful. Although they have been sellers over the past three months, Asia funds in general are overweight on China, according to HSBC research cited by Reuters.

“Just like all other Chinese manufacturers, (chipmakers and AI suppliers) will eventually end up in a price war,” said fund manager Wang Zhuo, partner at Shanghai Zhuozhu Investment Management, according to Reuters.

Connecting the Coverage

We covered Chinese stocks entering a bear market on 22 October in our piece on China stocks losing $2.4 trillion. In the US, our piece on neocloud stocks and their bonds tracks the debt side of the AI build-out, and our WorkBuddy piece covers demand for China’s office AI agents.

The Structural Read

As we read it, the weight matters as much as the fall: Goldman Sachs puts AI stocks at 42% of China’s market capitalisation and 57% of turnover, according to Reuters, so a fall in the theme reaches most investors.

As we read it, valuations are lower but not low by the comparison Reuters draws: the STAR50 trades at around 100 times trailing earnings, down from nearly 250, against 30 for the Nasdaq 100.

As we read it, part of the fall is about US market access: Reuters linked the roughly 60% decline in Innolight and Eoptolink in part to Washington moving towards banning them from supplying US data centres.

Three Implications

FOR LISTINGS Hong Hao of Lotus Asset Management told Reuters the fall will put a stop for many companies trying to list; Reuters said frustration is likely to slow equity fundraising by tech firms.

FOR POLICY Reuters said the fall is a setback for Beijing’s efforts to steer household savings into the stock market to help fund the country’s AI ambitions.

FOR BUYERS Goldman Sachs has Innolight and CXMT on a revamped list of Chinese AI stock recommendations, and BNP Paribas’ William Bratton sees buying opportunities for the careful, according to Reuters.

The Business Engineer Lens

This story maps onto the Business Engineer framework The AI Capex Map & The State of AI Hyperscalers.

The framework puts it this way: “It is a sovereign-scale financing problem dressed in tech-company clothing.”

As we read it, China shows the household side of that financing: Reuters said Beijing has been steering savings into stocks to fund AI, and the STAR50 has now lost about $480 billion. The framework was published in May 2026 and does not discuss China’s market or this selloff.

What Is Not Established

Reuters gave percentage moves and periods, not share prices, so the chart index levels are our arithmetic from those percentages, and the periods differ by stock. The $480 billion figure is the STAR50 index’s loss in market value as reported by Reuters, not a total for all Chinese AI stocks. China’s securities regulator did not immediately reply to questions from Reuters. We read the Reuters analysis in full and did not contact the companies.

The Bottom Line

Reuters reported that China’s STAR50 index of AI and semiconductor leaders has fallen 40% in less than four months, erasing about $480 billion, while Goldman Sachs puts AI stocks at 42% of China’s market capitalisation. Unitree, MetaX and Moore Threads have halved, and Innolight and Eoptolink are down roughly 60%, according to the report.