China’s CSI 300 enters bear market as tech selloff deepens

China's benchmark CSI 300 entered a bear market on Thursday, October 22. The index has fallen 20% from its June peak and has now dropped for 10 straight weeks, according to CNBC, which cited LSEG data. In Hong Kong, the Hang Seng Index slid about 3% to a four-month low. Investors sold tech shares and gave up on hopes for more economic stimulus from Beijing.cnbc.com

The CSI 300 fell 1.8% to close at its lowest level since July 2025. That left it 20.2% below its June 22 closing peak, past the 20% decline that usually defines a bear market, Reuters reported via The Economic Times. This is the index's first bear market since the 2020 pandemic selloff, according to Investing.com.freemalaysiatoday.com+1

Tech and AI shares lead losses

The Hang Seng Tech Index dropped 5% to a two-year low. Alibaba ↘ 1.41% fell more than 6% and Tencent also declined, Reuters reported. Selling also hit AI-linked mainland stocks. Bloomberg named optical firms Eoptolink Technology and Zhongji Innolight among the biggest losers. The losses came as investors pulled back from AI trades worldwide.bloomberg.com+1

Leo Wang of Qianchuang Capital said investors had piled into technology in the first half of 2026. "This created a severe bubble in certain sectors and a serious drain on others," he told Reuters.freemalaysiatoday.com

Thursday was also the deadline for Chinese residents to file income tax owed on offshore trusts. Strategists told Dimsum Daily that some major shareholders of listed private firms had been selling stock, possibly to cover those tax bills.dimsumdaily.hk

Stimulus hopes fade

Kelly Chung of Value Partners said the limited stimulus measures China announced before the National Day holiday "disappointed market expectations." She added that investors had "largely priced out" more near-term support, according to Reuters. Third-quarter growth came in stronger than expected, led by exports, which further lowered expectations of new policy support.freemalaysiatoday.com

The broader economic picture is weaker. Industrial profits grew at their slowest pace of the year in September, and second-quarter GDP growth was the slowest in more than three years, CNBC reported. A long property slump and weak consumer demand weighed on that growth.cnbc.com

Divided outlook

Shaun Rein of China Market Research Group expects more selling. He said China's retail investors, who drive about 90% of daily trading, tend to exit fast when uncertainty rises. Still, he called the selloff excessive. "It's a crisis of confidence right now not a crisis in the economy," Rein told CNBC, and he predicted a strong rebound in 2027.cnbc.com

Zeng Wenkai of Shengqi Capital said Tencent's sharp fall was likely "the last of the panic selling," but added that "such painful wounds will take time to heal," Reuters reported.freemalaysiatoday.com