In China, the AI Bubble Has Already Burst
An anonymous reader quotes a report from Reuters: While global tech stocks teeter, in China they have already crashed as lofty valuations collapse under worries about AI demand and curbs on Chinese exports. The meltdown, tanking the mainland STAR50 index of AI and semiconductor leaders by 40% in less than four months and vaporizing some $480 billion in market value, is an ill omen for wobbly…
The AI bubble in China has officially burst, according to Reuters. In just four months, the mainland STAR50 index of AI and semiconductor leaders plummeted by 40%, wiping out $480 billion in market value. This collapse has put a halt to a two-year rally that began with economic stimulus, and it has also slowed Beijing's attempts to transition to a slow bull market.
Beijing-based fund manager Dong Baozhen noted that China's broad blue-chip index has fallen about 20% from its June highs. The stock market has transformed into a speculative frenzy, as described by Dong. The root cause of the downturn remains unclear, but traders have pointed to high valuations, tax liabilities, and the looming threat of foreign bans on Chinese data center equipment.
Goldman Sachs reports that AI stocks constitute 42% of China's market capitalization and 57% of trading turnover, making investors highly vulnerable to the market's decline. Fund managers warn that this market failure will deter many companies from listing and will lead to intense price wars among chipmakers and AI suppliers. Leo Wang, a partner at Qianchuang Capital, emphasizes that all bubbles eventually burst and that this is just a manifestation of this inevitability.
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- In China, the AI bubble has already burst economictimes.indiatimes.com
