China's technology stock selloff is threatening President Xi Jinping's plan to channel household savings into the country's tech sector, according to Investing.com.
The SSE Star 50 index has fallen 40% in less than four months, wiping out at least $480 billion in market value. Losses have spread across companies tied to artificial intelligence, electric vehicles and semiconductor manufacturing. Beijing has mobilized state-backed funds, insurers and regulators to support the market.
Goldman Sachs estimates that AI-related companies make up 42% of China's total stock market capitalization. More than 3,000 listed companies generate AI-related revenue, with a combined market value of about $10 trillion as of March, according to the report.
Battery maker CATL has fallen 35% this year. Robot maker Unitree has lost half its value since its August initial public offering. Shares of Suzhou TFC Communication and Victory Giant Technology have dropped as much as 26% over the past week.
The report cites elevated valuations, domestic competition, higher energy costs, tariffs and the possibility that the United States and Europe could restrict access to Chinese technology and data-center equipment. It also points to weak domestic demand and the prolonged property crisis.
The CSI 300 index has fallen about 21% from its June peak. Over the same period, Taiwan's benchmark has gained 56%, South Korea's has risen 36% and Japan's Nikkei 225 has advanced more than 25%.
According to the report, Beijing wants households to invest in equities to fund AI infrastructure and reduce reliance on property, which accounts for roughly 70% of household wealth. Repeated market collapses and regulatory interventions have damaged retail investor confidence, the report says. The Shanghai Composite remains near 4,000, well below its October 2007 peak of about 6,100.
The STAR 50 trades at about 38 times forward earnings, compared with about 20 times for the Nasdaq 100, the report says.