China's CSI 300 Enters Bear Market After 20% Drop From June Peak

China's stock market entered bear-market territory on Thursday, October 22, after the benchmark CSI 300 Index fell more than 20% from its June peak, extending a prolonged selloff driven by collapsing technology shares and weakening investor confidence.

The CSI 300 declined 1.8% to close at 4,036.30, its lowest level since July 2025. The index has now lost approximately 20.2% from its June 22 high, crossing the threshold commonly used to define a technical bear market.

According to Reuters reporting, Chinese regulators had already expressed concern about persistent market volatility earlier this week, promising additional measures to maintain financial stability.

The CSI 300 tracks 300 major companies listed in Shanghai and Shenzhen, making it a widely followed benchmark for mainland Chinese equities.

Its latest decline extends a losing streak approaching ten consecutive weeks, with technology stocks suffering disproportionately severe losses.

China's STAR 50 index, which tracks companies on Shanghai's technology-focused exchange, has fallen nearly 40% from its July peak. Shenzhen's ChiNext index has declined approximately 36% over a comparable period.

The weakness follows a broader global AI stock selloff, which saw institutional investors withdraw $4.75 billion from technology funds during a single reporting week.

Chinese semiconductor companies have been particularly vulnerable as investors reassess valuations and competition across the AI industry.

Thursday's selloff also pushed the Shanghai Composite down 1.5%, while the CSI Semiconductor Index declined 3.6%.

The deterioration contrasts with July's Alibaba stock rally, when investors briefly returned to Chinese technology companies following an earlier correction.

The latest losses spread beyond mainland exchanges, with Hong Kong's Hang Seng Index falling approximately 3% and the Hang Seng Tech Index dropping 5%.

Alibaba shares declined more than 6%, while Tencent lost approximately 2.9%, according to October 22 market reporting.

The retreat deepens the Hong Kong market weakness previously seen when rising global bond yields pressured technology and financial shares.

Meanwhile, Chinese AI companies remain under pressure from doubts about the profitability of expensive computing infrastructure.

The same concerns have affected American technology stocks, with Coinpaper's earlier chip-sector analysis examining the growing uncertainty surrounding AI investment returns.

The selling also reflects disappointing corporate earnings. Battery manufacturer CATL fell approximately 12% on Wednesday after quarterly profit growth missed market expectations.

China's economy expanded 4.5% during the third quarter, exceeding expectations and remaining consistent with the government's annual growth objective.

However, the stronger headline number has reduced expectations for aggressive new stimulus measures, leaving investors concerned about weak consumer spending and corporate profitability.

China's central bank also maintained its one-year and five-year loan prime rates at 3.0% and 3.5%, respectively.

The combination of persistent economic weakness and limited policy intervention has reinforced investor caution.

Earlier Barclays research warned that technology investors were becoming increasingly selective about valuations and future profitability.

China's securities regulator has promised closer monitoring of market risks and reforms intended to support technology-focused exchanges.

Nevertheless, the broader international retreat from AI investments illustrates why domestic policy measures alone may not reverse the downturn.