SHANGHAI: China’s blue-chip index fell to a one-year low on Thursday as traders returning from a week-long holiday faced renewed geopolitical tensions, higher global yields, and a looming earnings season that threatens still-lofty valuations of Chinese tech shares.
China’s stock benchmarks are now near where they were two years ago, when a stimulus bonanza from Beijing lit up share prices and boosted hopes for a slow bull run - which is now limping in a three-month downtrend.
The blue-chip CSI300 Index closed down 1.1 percent. The index has hit its lowest level since August 2025 and is down roughly 15 percent from its June peak.
The Shanghai Composite Index dropped 0.8 percent while the tech-focused STAR 50 Index slumped nearly 5 percent to hit a five-month low.
In Hong Kong, where the market fell nearly 2 percent during China’s National Day holiday, Hang Seng lost 1.4 percent on Thursday, touching the lowest level in three months.
Wang Zhuo, partner of Shanghai Zhuozhu Investment, said excessive optimism in the first half toward “hard tech” shares such as chipmakers fuelled irrationally high valuations, but “bubbles would inevitably burst.”
Following a tumble that wiped out more than one-third of its value since July 1, the STAR 50 Index still trades at roughly 100 times earnings.
Risk appetite was also curbed by renewed Sino-US tensions as optimism from last month’s leadership meetings faded.
Taiwan’s de facto ambassador to Washington said on Wednesday that ties with the United States remained robust after last month’s summit between Donald Trump and Xi Jinping.
Also signalling tensions, the Federal Communications Commission said on Wednesday it will vote on October 29 to bar all Chinese labs from testing electronic devices for use in the US, widening a previous action targeting Beijing.
Traders are also monitoring Sino-EU trade talks this month as China has reportedly rejected a European Union request for voluntary curbs on hybrid car exports.