China’s CSI 300 Enters Bear Market, Down 20% From June Peak

China’s CSI 300 index fell into bear-market territory on Thursday, October 22, with its decline from a June peak reaching 20%, according to Economic Times Markets. The benchmark, which tracks 300 large stocks listed in Shanghai and Shenzhen, dropped more than 1% on Thursday and was down nearly 3% for the week after 10 consecutive weeks of losses.

A fall of about 20% from a recent peak is commonly described as a bear market. The threshold measures the scale of a market retreat; it does not establish how much further shares might fall or when they will recover.

Tax deadline adds to growth and earnings concerns

One possible source of selling pressure was Beijing’s October 22 deadline for wealthy individuals to declare and pay tax on offshore trust income. Earlier Reuters reporting, cited in the account, suggested some investors may have sold shares to raise cash. That remains a possible explanation rather than a demonstrated measure of how much selling the deadline caused.

Sophie Altermatt, an economist at Julius Baer, told Reuters that China’s policy priorities remained technological development, industrial upgrading and greater self-sufficiency, rather than a near-term growth boost. Market participants also pointed to tighter taxation policies as a short-term drag on equities.

The market decline comes against a weaker economic backdrop. The account described second-quarter growth as the slowest in more than three years, with a prolonged property downturn and subdued consumer demand weighing on activity. Sluggish corporate earnings growth has added to investors’ concerns.

Further selling risk, but a rebound forecast for 2027

Shaun Rein, managing director of China Market Research Group, told CNBC that geopolitical uncertainty, worries about an artificial intelligence investment bubble and deteriorating consumer confidence could bring further selling. He also warned that China’s substantial retail-investor participation could amplify price swings.

Yet Rein argued that the retreat had gone too far. Pointing to resilient exports and indications of improving property prices in the largest Chinese cities, he characterised the problem as primarily one of confidence and predicted a strong recovery in Chinese equities in 2027. That is an analyst forecast, not an established outcome.

AI investment fears extend beyond China

The account also linked investor unease to wider concerns about the sustainability of AI spending, noting that South Korea’s Kospi had entered bear-market territory more than once during the year.

Investor Michael Burry has suggested that an AI-related downturn could arrive sooner than his earlier warning of a possible crash beginning in 2028. He cited research from Ares Management examining how a period of disappointing AI revenue, relative to heavy capital spending by major cloud-computing companies, could prompt boards to redirect investment.

Those comments describe a risk scenario, not evidence that an AI bubble has burst. The account also noted that Burry has taken short positions in AI-linked stocks, giving him a financial interest in falling prices.