Why Are Chinese Stocks Set for a 12th Straight Weekly Loss?
The blue-chip CSI300 Index dropped 0.4% to a one-year low by the lunch break, while the Shanghai Composite Index lost 0.3%.
The CSI300 is down 0.9% for the week and 7.6% for the month, on track for its biggest monthly loss since July.
Over the last 12 weeks, the index has lost 14%, the longest losing streak on record.
What Triggered the AI-led Selloff in China?
AI-related shares led declines onshore, following overnight falls in New York and across Asian peers. Shares in Alphabet, Amazon and Intel all fell on AI cash burn.
Memory chip giant SK Hynix fell more than 7%. Shanghai’s tech-focused STAR50 index fell 1.8%.
CSI 5G communications, the industry gauge, plunged as much as 6% in early trade.
Chinese optical module producer Eoptolink Tech tumbled nearly 8% and is down 46% this month.
Which Chinese Sectors Held Up Against the Slide?
Consumer staple shares rose 1% against broad declines. Mainland property developers in Hong Kong gained 2.7%.
Hong Kong’s Hang Seng was up 1.6% at one point and 1.1% for the week. Tech majors listed in Hong Kong rebounded 1.4%, but their gauge still hovers near its lowest level in two years.
What Does UBS Say About AI Spending and Valuations?
Kenneth Fong, head of China internet research at UBS, put the sector at 10-11 times price-to-earnings after accounting for new AI investment.
“At valuations of 10-11 times price-to-earnings after accounting for new AI investment, we think some stocks are increasingly treating the spending peak as a permanent earnings burden, while assigning limited value to a normalisation of future cash flows or successful AI monetisation,” said Fong.
Does This Affect Bursa Malaysia-listed Companies?
The article names no Bursa-listed company, so any read-across is indirect. Investors tracking AI themes can compare the spending debate with local names using this AI Stock Analysis for Malaysians guide.
Key Takeaways
- The CSI300 has lost 14% over 12 weeks, the longest losing streak on record.
- The index is down 7.6% this month and on track for its biggest monthly loss since July.
- AI-related shares led the decline, with Eoptolink Tech down 46% this month.
- UBS puts the sector at 10-11 times price-to-earnings after AI investment.
Disclaimer: This article is for information only and does not constitute investment advice. Stocks to monitor should be assessed against your own circumstances. Please do your own research before making any investment decision.
Frequently Asked Questions
How many weeks in a row have Chinese stocks fallen?
Chinese stocks are on track for a 12th straight weekly loss. The CSI300 has lost 14% over the last 12 weeks, the longest losing streak on record.
How much has the CSI300 fallen this month?
The CSI300 Index is down 7.6% for the month and 0.9% for the week. The month is on track for its biggest monthly loss since July.
Why are AI stocks falling in China?
AI-related shares led declines after overnight falls in New York. Alphabet, Amazon and Intel fell on AI cash burn, and SK Hynix dropped more than 7%.
What valuation does UBS give Chinese stocks?
Kenneth Fong, head of China internet research at UBS, cited valuations of 10-11 times price-to-earnings after accounting for new AI investment.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
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