A number has been doing the rounds on social media: a trillion-plus yuan “wiped out from China’s stock market today.” The viral version is wrong. The real version is worse, and it took four months instead of one afternoon.
China’s STAR50 index, the Shanghai board that tracks the country’s AI and semiconductor leaders, has fallen roughly 40% from its July peak, erasing about $480 billion in market value. The blue-chip CSI 300 has slipped into a bear market, down about 20% from its June high, and on Tuesday it hit a 14-month low as tech selling deepened yet again. Reuters put it plainly this week: in China, the AI bubble has already burst.
So what actually happened, and why is crypto barely blinking?
What Caused the China AI Stock Crash?
The uncomfortable answer is that nobody can point to a single trigger. There was no fraud, no scandal, no surprise rate hike. There was simply too much money chasing too few profits.
A few ingredients combined:
- Valuations with no floor. Even after a 40% fall, the STAR50 still trades at roughly 100 times past earnings. The Nasdaq 100, for comparison, trades at around 30 times. That tells you how far the index had run, and how far it can s...
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