Investing.com — China’s stock market has missed the global artificial intelligence rally in 2026, as economic weakness, limited AI hardware exposure and regulatory uncertainty weigh on investor sentiment, according to Yardeni Research.
China’s CSI 300 index has fallen nearly 6% this year, contrasting with gains exceeding 65% in South Korea’s Kospi and Taiwan’s Weighted Index, Yardeni said.
The divergence follows Chinese developer Moonshot AI’s July release of a competitive low-cost model, reinforcing China’s position in the global AI race.
Yardeni identified three reasons for the underperformance.
First, China’s economy faces weak consumption, deflation, youth unemployment and a property downturn now in its fifth year.
The housing slump has eroded household wealth and reduced local government revenue from land sales, constraining economic activity.
Second, China’s major equity benchmarks lack the concentration of AI hardware manufacturers driving regional markets.
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South Korea and Taiwan benefit from semiconductor suppliers Samsung Electronics, SK Hynix and TSMC, which are closely tied to global AI infrastructure spending.
China’s strengths lie primarily in AI models and applications, with domestic hardware companies trading mainly outside major benchmarks.
Third, regulatory uncertainty continues to discourage investors following Beijing’s technology crackdowns, including its intervention in Alibaba affiliate Ant Group’s planned listing.
Yardeni also highlighted US-China tensions and potential American restrictions on advanced chip exports and investment.
These concerns have weighed on valuations. The MSCI China index’s forward price-to-earnings ratio has declined to 10.2 from 11.7 in mid-May.
The weakness persists even after onshore-listed companies reported nearly 26% profit growth in the second quarter, their strongest quarterly increase in five years.
Yardeni warned that China’s dependence on AI-related exports poses another risk. Nomura estimates semiconductors, computers and related products account for roughly half of China’s export growth.
A slowdown in global AI spending could hurt China’s economy, even though its broader stock market has missed the rally elsewhere in Asia.
Original Article
Why is the Chinese stock market missing the AI rally
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