China Stocks Set for Bear Market as AI Trade, Policy Hopes Fade

Chinese equities have slid into a bear market, erasing $2.4 trillion in market value since a May peak, Bloomberg reports. The drawdown marks a sharp reversal for a market that had been rallying earlier in the year.

Two drivers anchor the selloff. First, a protracted slump in consumption continues to weigh on sentiment. Second, mounting doubts over the profitability of artificial intelligence have cooled the AI trade that helped power the earlier advance. Fading hopes for policy support compound both pressures, per the report's framing.

The scale of the loss matters for the yuan. A $2.4 trillion wipeout in equity value is the kind of drawdown that can weigh on foreign portfolio appetite for Chinese assets. That linkage is interpretation, not something the source states, but it frames why an equity bear market belongs on a CNY trader's radar.

The composition of the damage also stands out. Weak consumption points to a domestic demand problem, while the AI doubts hit the growth narrative that had attracted offshore capital. When both the defensive story and the growth story break at once, rebounds tend to need a clear catalyst. The source offers none beyond hopes for policy that have now faded.