China stock market loses $3.5 trillion since May peak

China's equity market has experienced a massive downturn, with approximately $3.5 trillion in market capitalization erased since reaching its peak in May. The decline has pushed the benchmark CSI 300 index into a bear market, while Hong Kong's technology index is nearing the loss of all gains made over the past two years.

Several factors are driving the sell-off, including persistent weakness in domestic consumption and intense price wars among companies. These pressures are impacting diverse sectors, including banking, electric vehicles (EV), and artificial intelligence (AI). Corporate earnings have also missed expectations; for instance, battery manufacturer CATL reported profits below market estimates, and China Mobile saw an 8% year-on-year decline in profits.

Investor sentiment remains low due to limited expectations for significant government stimulus packages to bolster the economy. Projections for future earnings have also been revised downward, with MSCI China index earnings estimates falling by over 4% and Hang Seng Tech index estimates dropping by more than 13% since late March.