China’s CSI 300 slides into bear market, down 20% from June top
China's CSI 300 benchmark has shed 20% since its June high, tipping into bear-market territory on Thursday after ten consecutive weekly losses. The gauge, covering the biggest Shanghai- and Shenzhen-listed firms, slipped over 1% that day and nearly 3% on the week.
A mix of pressures is dragging on investor mood. Authorities have set October 22 as the cutoff date by which affluent citizens must report and settle taxes owed on income held in offshore trusts, a rule that reportedly spurred some to sell equities to free up cash, per Reuters. Julius Baer economist Sophie Altermatt noted that Beijing continues to prioritize tech progress, industrial modernization and reduced reliance on outside resources over short-term stimulus for growth.
Stricter tax enforcement has added to the strain on shares, according to sources cited by Reuters. Separately, China’s economy expanded at its weakest rate in over three years during the second quarter, held back by an extended real-estate slump and sluggish household spending. Lackluster corporate profit growth has further unsettled traders.
Shaun Rein, who heads China Market Research Group, said on CNBC that he anticipates additional selling pressure as geopolitical friction, fears around an AI valuation bubble, and sagging consumer sentiment continue to weigh on the market, adding that China’s sizable pool of retail investors could magnify price swings.
Even so, Rein believes the downturn has overshot, pointing to steady export performance and emerging signs that housing prices in top-tier cities are leveling off. He characterized the situation as a matter of eroded confidence rather than genuine economic trouble, and predicted Chinese stocks would stage a robust recovery by 2027.
Concerns over an AI bubble have also rattled South Korea’s Kospi, which has dipped into bear-market conditions on multiple occasions this year. Investor Michael Burry recently suggested that a correction tied to AI could hit markets sooner than he had earlier anticipated.
Why it matters for markets: A worsening CSI 300 bear market and broader softness in China-linked shares could dampen risk sentiment across Asian equities and indices tied to China’s economic trajectory, including commodity demand for industrial metals and energy.
Source: Economic Times Markets