Chinese AI Stocks Plunge as Foreign Capital Exits

Chinese technology stocks have emerged as the worst performers in the global artificial intelligence trade, with the Star50 Index falling nearly 40 percent over the last six months. This downturn follows a brief rally between April and June that was fueled by state support and general optimism surrounding AI.

The Government of China is now attempting to stabilize the market after major chipmakers MetaX Integrated Circuits Shanghai and Moore Threads Technology lost approximately half of their value. Other sectors faced similar declines, including the ChiNext index, which dropped 36 percent, and memory-chip giant ChangXin Memory Technologies, which fell 27 percent from its July post-listing peak. Robotics firm Unitree Robotics also lost around 50 percent of its value from an August high.

The sell-off is driven by high valuations and significant foreign capital outflows, which totaled an estimated 90 billion yuan in the third quarter. Because Chinese AI firms rely more heavily on equity financing than debt, the slump threatens Beijing's strategic goal of achieving technological supremacy. In response, financial regulators met on October 15 to discuss stabilization measures and urged state-backed funds, known as the national team, to accelerate stock purchases.