China’s Stocks Enter Bear Market as Selling Spreads Across Asia

The CSI 300 index stood at 4,060.19 at Thursday’s morning break, about 20% below its June peak and down 13.94% from its January 1 level.

Bloomberg linked the drop to fading stimulus hopes, weak earnings and worries over the global artificial intelligence trade.

Stock markets in South Korea, Japan and Taiwan also fell, with the KOSPI dropping 2.56% to 5,588.94, the Nikkei 225 trading 1.65% below its prior close, and the TAIEX sliding 1.15% to 46,346.92.

Hong Kong’s gauge of major Chinese companies listed in the city fell as much as 2.9% on Thursday, with the Hang Seng Tech Index having already touched a two-year low on Tuesday.

On Wednesday, Tencent slipped below HK$400, and CATL dropped on weaker profit growth and fierce competition.

Policy and State Buying

Despite the slide, policymakers have offered little new support so far. On Tuesday, China held its one-year loan prime rate (LPR) at 3.0% and the five-year LPR at 3.5%, both rates now unchanged for 17 straight months.

Analysts at Maybank said stable headline growth makes new fiscal and monetary stimulus less urgent, Reuters reported. That growth reached 4.5% in the third quarter, beating forecasts.

State-backed buying has also been smaller than earlier state selling. Central Huijin leads China’s market stabilization efforts. It raised $231 billion through exchange-traded fund (ETF) sales in the first half.

Since purchases resumed in July, it has reinvested only about $43 billion, Bloomberg Intelligence analysts estimate. That leaves roughly $188 billion available.

However, the analysts warned that state buying alone may not deliver a lasting recovery.

Sovereign Wealth Funds Increase Exposure

In contrast, some long-term investors have increased their exposure to China this year. Sovereign wealth funds put $14.2 billion into mainland China and Hong Kong through September.

That total was nearly triple the $4.9 billion these funds invested in all of 2025. Saudi Arabia’s Public Investment Fund led with $6 billion.

Together, 4 Gulf funds made up nearly 70% of the inflows. The deals included a minority stake in Luckin Coffee and Alibaba’s $10.2 billion share sale.

Still, China remains a small destination for sovereign capital. The US attracted $132.4 billion in sovereign investment over the same nine months, according to Global SWF. Europe and the UK drew $44.6 billion.