China's STAR 50 down about 30% since June, on track for worst quarter in recent memory
In brief
- STAR 50 Index is down about 30% since the end of June, Crypto Briefing reported.
- July selloff erased more than 28% of the index's value, per Crypto Briefing.
- Drop followed a nearly 75% rally over the prior three months, the report said.
- Biwin Storage and Moore Threads shares each fell more than 40%, the report said.
- Crypto Briefing linked the selloff to doubts about returns on AI infrastructure spending.
A July reversal
Most of the losses landed fast. A July selloff erased more than 28% of the index's value, Crypto Briefing reported, and it came right after the STAR 50 rose nearly 75% over the prior three months.
It wasn't only a China story.
Semiconductor indices in South Korea, Taiwan and the US declined at the same time, per the report. The broader Chinese market didn't escape either: the CSI 300 blue-chip benchmark fell roughly 9% to 10% in July (the outlet gave a range, not an exact figure), which Crypto Briefing said was its worst monthly performance since January 2016.
Individual names took heavier hits. Shares of Biwin Storage Technology and Moore Threads Technology each fell more than 40%, while Yuanjie Semiconductor and Hua Hong Grace Semiconductor each dropped 14% or more in a single day during July's heaviest trading sessions, according to the report.
Questions about AI spending
Crypto Briefing's analysis is that investors started asking whether the large capital being spent on AI infrastructure would generate proportional returns. The outlet called it an inconvenient question.
It also pointed to open-source AI. Advances there, including the Kimi K3 model, had started to undercut the assumption that AI leadership requires the most expensive hardware, the outlet said. Investors moved capital into defensive sectors, per the report.
The STAR Market itself was designed as China's answer to Nasdaq: a venue for high-growth tech companies that may not meet the profitability requirements of traditional exchanges.
Beijing's usual playbook
Beijing usually handles equity market stress by having state-backed funds buy shares to put a floor under prices, Crypto Briefing said, and it reported that this buying was used during July's turbulence. According to the outlet, those purchases gave brief relief within trading sessions but didn't reverse the broader downtrend.
Frequently asked questions
How much has China's STAR 50 Index fallen this quarter?
The STAR 50 has fallen about 30% since the end of June, according to Crypto Briefing. Most of that came in July, when a selloff erased more than 28% of the index's value right after a nearly 75% three-month rally.
What caused the selloff in Chinese tech hardware stocks?
Crypto Briefing attributed it to investors questioning whether heavy AI infrastructure spending would generate proportional returns. The outlet also said open-source AI advances, including the Kimi K3 model, had started to undercut the assumption that AI leadership requires the most expensive hardware.
What is China's STAR Market?
The STAR Market was designed as China's answer to Nasdaq. It's a venue for high-growth tech companies that may not meet the profitability requirements of traditional exchanges, and its STAR 50 Index tracks many prominent Chinese tech and semiconductor stocks.
