China equities lose US$3.5 trillion in value amid profit declines

China’s stock market has experienced a deepening sell-off, losing US$3.5 trillion in value since its peak in May. The downturn has pushed the onshore CSI 300 Index into a bear market and significantly reduced gains in Hong Kong’s technology sector.

Investor pessimism is driven by declining corporate profits across various industries, including banking, electric vehicle manufacturing, and AI development. This decline is attributed to a protracted slump in domestic consumption and intense competition among businesses.

Market analysts note that while the economy is slowing, there is a growing perception that Chinese leadership is not prepared to implement forceful new stimulus measures, as the current pace of deceleration is viewed as tolerable. Consequently, earnings forecasts for the MSCI China Index have declined by more than 4 percent since the end of March.