The CSI 300 index has officially entered a bear market, dropping approximately 20% from its June peak. By Thursday morning, the index reached 4,060.19, marking a 13.94% decline since the start of the year. This downturn follows ten consecutive weeks of losses, driven by concerns over weak earnings and fading stimulus expectations.
Despite the market decline, Chinese policymakers have kept interest rates steady. The one-year loan prime rate remains at 3.0%, and the five-year rate at 3.5%, maintaining these levels for 17 months. While third-quarter growth reached 4.5%, state-backed stabilization efforts have slowed, with only $43 billion reinvested since July out of $231 billion raised.
The market pressure has spread across Asia, impacting major regional indices. South Korea’s KOSPI fell 2.56% to 5,588.94, while Japan’s Nikkei 225 declined 1.65% to 63,554.76. Taiwan’s TAIEX also saw a 1.15% drop to 46,346.92. Additionally, the Hang Seng Tech Index recently hit a two-year low amid a broader sell-off in technology and AI hardware stocks.
In contrast to the general trend, sovereign wealth funds have increased their investments in China and Hong Kong, totaling $14.2 billion through September. This figure is nearly triple the $4.9 billion invested throughout 2025. Gulf-based funds accounted for nearly 70% of these inflows, with Saudi Arabia’s Public Investment Fund contributing $6 billion.
