China's CSI 300 Enters Bear Market as Asian Sell-Off Broadens

China's CSI 300 benchmark fell into bear market territory on Thursday after recording 10 consecutive weekly declines, based on LSEG figures referenced by CNBC.

The downturn was attributed by Bloomberg to reduced hopes for stimulus, disappointing corporate profits, and concerns surrounding the global artificial intelligence sector. Markets in South Korea, Japan, and Taiwan also experienced declines.

China's Stocks Slide Into Bear Market

At Thursday's morning trading halt, the CSI 300 was at 4,060.19, roughly 20% beneath its June high. The index had also lost 13.94% since the start of the year.

Despite the downturn, policymakers have provided minimal fresh assistance thus far. On Tuesday, China maintained its one-year loan prime rate at 3.0% and its five-year LPR at 3.5%. Both rates have remained unchanged for 17 consecutive months.

Analysts at Maybank, as reported by Reuters, indicated that stable headline growth diminishes the urgency for new fiscal and monetary stimulus. That growth hit 4.5% in the third quarter, exceeding expectations. BeInCrypto earlier reported that the losing streak has persisted despite the stronger economic data.

State-backed purchasing has also been less substantial than earlier government sales. Central Huijin leads China's market stabilization initiatives. It generated $231 billion through exchange-traded fund disposals in the first half of the year.

Since purchases resumed in July, it has put back only about $43 billion, according to Bloomberg Intelligence estimates. That leaves roughly $188 billion still available. However, the analysts cautioned that government purchasing alone might not produce a lasting market rebound.

Selling Spreads From Seoul to Taipei

The pressure reached beyond mainland China on Thursday. South Korea's KOSPI dropped 2.56% by midday to 5,588.94, falling from its prior closing level of 5,735.66.

Japan's Nikkei 225 was trading 1.65% below Wednesday's close by early afternoon, at 63,554.76. Taiwan's TAIEX likewise declined 1.15% from its previous close to 46,346.92 in late-morning trading.

Hong Kong also lost ground. A measure of major Chinese companies listed in the city fell as much as 2.9% on Thursday.

The Hang Seng Tech Index had already reached a two-year low on Tuesday as AI hardware stocks declined. On Wednesday, Tencent dropped below HK$400, and CATL fell amid weaker profit growth and intense competition.

Sovereign Funds Step Back Into China

By contrast, some long-term investors have boosted their China exposure this year. Sovereign wealth funds invested $14.2 billion in mainland China and Hong Kong through September. That data comes from Global SWF and was shared with CNBC.

That amount was nearly triple the $4.9 billion those funds deployed in all of 2025. Saudi Arabia's Public Investment Fund led with $6 billion. Together, four Gulf funds contributed almost 70% of the total inflows.

The transactions included a minority position in Luckin Coffee and Alibaba's $10.2 billion share sale. Andrew Wang, who leads consumer investments in Mubadala's private equity arm, highlighted the market's valuations.

“Valuations are lower than they’ve been in years. I think this will be a really good vintage for investors in China,” he said.

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