Chinese equities have logged a historic 10-week losing streak, marking the longest sequence of weekly declines in the country's main benchmark history, according to Barchart data. The persistent selloff comes despite official National Bureau of Statistics data showing China's economy grew 4.5% year-over-year in the third quarter of 2026.
Technology and Chipmakers Lead Market Decline
The stock downturn has hit technology and semiconductor shares particularly hard. The CSI 300 Index dropped 3.4% last week and now sits approximately 17% below its June peak. Meanwhile, the hardware-focused ChiNext Index has fallen about 36%, and the tech-heavy STAR 50 Index has tumbled nearly 40% over the current half-year.
Specific losses in the semiconductor sector include chipmakers MetaX and Moore Threads, which have both lost roughly half of their market value. This pressure reflects valuation concerns and a global AI equity rotation, similar to trends seen when chip stocks lost $2 trillion in an eight-day rout earlier this year, prompting observers to analyze buying opportunities in Asian chip selloffs.
Macroeconomic Growth Outpaces Capital Market Sentiment
China's macroeconomic figures present a sharp contrast to equity prices. Third-quarter GDP growth reached 4.5%, surpassing the 4.4% consensus estimate and accelerating from 4.3% in the second quarter. Total growth for the first nine months stood at 4.6%, placing it comfortably within Beijing's official target range of 4.5% to 5%. Additionally, industrial output grew 5.5% in September.
Economist Steve Hanke of Johns Hopkins University noted that China's economy is booming with strong 4.5% annual growth even as equity markets fall. Conversely, economist Michael Pettis highlighted that the economy remains focused on boosting production while struggling to stimulate consumer demand. To curb further losses, state-backed funds intervened last week, pushing inflows into preferred exchange-traded funds to their highest levels since July, according to Bloomberg.
Key Takeaways
- CSI 300 Index fell 3.4% last week and is down 17% from its June peak, while STAR 50 dropped nearly 40%.
- Third-quarter GDP expanded by 4.5%, beating the 4.4% forecast, with September industrial output up 5.5%.
- Chipmakers MetaX and Moore Threads have each surrendered approximately 50% of their market valuation.
- Preferred ETF inflows surged to a multi-month high since July as state-backed funds attempted to stabilize prices.
Why It Matters
The stark divergence between solid top-line GDP numbers and a prolonged equity slump underlines deep investor skepticism toward domestic consumption and the ongoing real estate drag. While manufacturing and tech exports keep GDP figures afloat, equity markets remain unwilling to re-rate without broader domestic demand stimulus. If state-supported ETF purchases fail to establish a market floor, capital flight from Chinese tech equities could continue into late 2026.
