Chinese equities closed lower for a tenth straight week, the longest losing streak on record for the country's main benchmarks, as a sharp selloff in technology shares outweighed evidence of steadier economic growth. The CSI 300 Index fell about 3.4% last week and now sits roughly 17% below its June peak.
The damage has been concentrated in growth names. The STAR 50 Index, which tracks Shanghai's tech-focused board, has dropped nearly 40% in the current half-year, while the ChiNext Index is down about 36%. Chipmakers MetaX and Moore Threads have each lost around half their value.
The tech trade unwinds
The selloff has hit exactly the part of the market investors had counted on to carry China's equity story. Export strength in technology goods, particularly semiconductors and AI-related hardware, has been one of the few bright spots in an otherwise patchy economy. But that strength hasn't lifted the broader market, and the stocks most tied to the theme have been punished hardest.
Part of the problem is positioning. The chip names that rallied on AI enthusiasm now look expensive relative to near-term earnings, and the momentum that drove them higher has reversed. When the leaders fall, the index follows.
Growth is fine. The market isn't.
The macro backdrop isn't the obvious culprit. China's GDP grew 4.5% year-over-year in the third quarter, beating the 4.4% consensus and accelerating from 4.3% in the prior quarter. Industrial output rose 5.5% in September. Growth for the first nine months reached 4.6%, comfortably inside Beijing's 4.5% to 5% annual target.
Economist Steve Hanke of Johns Hopkins University argues the economy is booming and that its momentum simply isn't reflected in equity prices. That view puts him at odds with a market that keeps finding reasons to sell.
Investors are focused elsewhere: the continuing drag from property, soft household consumption, and doubts over whether AI-driven exports can offset weakness in the rest of the economy. Those concerns have proven stickier than the headline growth numbers.
State funds step in
There are signs that policy-linked money is trying to put a floor under prices. Inflows into preferred exchange-traded funds surged last week to their highest level since July, according to Bloomberg, a pattern that has previously accompanied state-backed buying. It hasn't been enough to break the streak yet.
The question now is whether the buying intensifies or the selling exhausts itself first. Either way, the record run of weekly losses has become the defining feature of this market, and the tech stocks that led the rally are the ones investors are watching most closely for a turn.
