China’s benchmark CSI 300 index entered bear-market territory on October 22, extending its decline to a 10th consecutive week. The index stood at 4,060.19 points at midday, about 20% below its June peak and down 13.94% since the start of the year. Selling then spread to South Korea, Japan and Taiwan as investors grew more concerned about weaker expectations for stimulus, soft corporate earnings and a cooling artificial-intelligence trade.
CSI 300 falls about 20% from June peak
The CSI 300 tracks large-cap stocks listed in Shanghai and Shenzhen. Its prolonged decline suggests that recently firmer economic data have not translated into sustained support for equities. Investors had been expecting additional fiscal or monetary measures, but recent policy signals have been relatively limited, prompting a reassessment of the earnings and valuation outlook for Chinese stocks.
The latest selloff has now lasted 10 weeks. The index was at 4,060.19 points before the midday close on October 22, roughly one-fifth below its June high and 13.94% below its January 1 level. By the usual market definition, a decline of 20% from a recent high marks entry into bear-market territory.
China leaves LPR rates unchanged for 17 months
The People’s Bank of China kept the one-year loan prime rate at 3.0% and the five-year LPR at 3.5% on October 20. Both rates have remained unchanged for 17 consecutive months, indicating that policymakers currently see limited urgency for further rate cuts.
Maybank analysts said the need for additional fiscal and monetary stimulus had eased as economic growth remained stable. China’s economy grew 4.5% in the third quarter, above market expectations, but the equity selloff continued despite the stronger-than-expected data.
That leaves investors focused on more than headline growth. They are also assessing whether corporate profits can recover, whether policy support can be sustained and whether economic expansion will translate more directly into listed-company earnings. Weak profitability and fading expectations for policy support have combined to weigh on risk appetite.
Investors watch the scale of state-backed buying
Central Huijin is one of the key institutions used to support China’s stock market. Data show that the institution raised $231 billion through exchange-traded fund-related operations in the first half of this year. At the same time, state-backed funds have put about $43 billion back into the market since July to provide support. The scale of those purchases is still considered smaller than the state’s earlier reductions in holdings.
State-backed inflows have offered some support, but they have not reversed the CSI 300’s extended decline. Investors continue to monitor the pace of future purchases, the specific policy tools deployed and whether those measures can improve market liquidity and expectations for corporate earnings.
South Korea, Japan and Taiwan also weaken
The selling was not confined to China. Stocks in South Korea, Japan and Taiwan also fell on the same day, reflecting a broader repricing of artificial-intelligence-related trades across Asia. The optimism that had built around the AI supply chain is facing closer scrutiny over valuations, corporate earnings and the durability of demand.
The synchronized weakness shows that market pressure is being driven by both regional factors and global technology stocks. Chinese equities are facing the combined effect of weaker stimulus expectations, soft earnings and a cooling AI theme, while valuation changes across the global technology supply chain are a central concern for markets in South Korea, Japan and Taiwan.
As of October 22, the CSI 300 remained in its 10-week decline, with state-backed buying and steady economic growth data yet to produce a reversal in the index’s trend. Investors will continue to watch for changes in lending rates, the scale of fiscal support and upcoming earnings data from listed companies.