CSI 300 hits 14-month low despite national team buying

China's benchmark stocks kept falling on Tuesday, October 27, and hit a 14-month low. Days earlier, state-backed funds made their largest purchases in more than a year, but those purchases did not stop the slide. The CSI 300 fell another 1.3% on Tuesday (The New York Times ↘ 1.20%). Shares had briefly risen at the open, but tech stocks resumed their decline.nytimes.com+1

The index entered a bear market on Thursday, October 22, when it closed down 1.8% at 4,036.30. That left it 20.2% below its June 22 closing peak. The rout has wiped out $2.4 trillion in market value since a peak in May.theedgemalaysia.com+1

Rescue fails to lift confidence

The "national team," a group of state-backed investment funds, put $6.8 billion into the market in one session on Thursday. Exchange-traded funds favored by the group took in 46 billion yuan that day, the most since the April 2025 tariff rout. The buying gave only short relief to a market that had fallen for 11 weeks in a row. Financial commentator Shi Shusi said the intervention "couldn't restore investors' confidence".cnbctv18.com+1

China's central bank tried a different kind of support on Monday. It created a swap facility to give emergency cash to non-bank financial firms that face large redemptions.brecorder.com

Banks see more downside

Morgan Stanley ↗ 1.86% said onshore and offshore Chinese stocks could fall another 10% to 15% before bottoming. The bank based that estimate on valuations at several market lows since 2008. UBS Group ↗ 0.71% said there was limited room left to fall, but that sentiment would not recover soon. Morgan Stanley also noted that markets have usually bottomed one to two months after high-profile buying by the national team.scmp.com+1

AI selloff leads the losses

Technology stocks have led the decline. The STAR 50, which tracks AI and semiconductor companies, has fallen 40% in less than four months and lost about $480 billion in value. AI stocks now make up 42% of the combined market value of mainland and Hong Kong-listed Chinese shares, according to Goldman Sachs The Goldman Sachs Group, Inc. ↗ 2.07%. Investors are also disappointed that Beijing has offered only small stimulus measures and no broad spending package.miamiherald.com+1

The selloff comes as senior Communist Party officials led by Xi Jinping meet to set the government's agenda. Some analysts expect the slump to continue. "Without new policy or tech catalysts, this kind of volatile, directionless environment may persist into early 2027," said Homin Lee, a senior macro strategist at Lombard Odier.theedgemalaysia.com+1