{"id":"1793117108366-money-segment","slug":"china-s-ai-bubble-bursts-2-4-trillion-gone","title":"China's AI bubble bursts, $2.4 trillion gone","summary":"China's AI-heavy equity bubble has deflated sharply. The STAR 50 index has dropped about 40% from its June/July high, erasing roughly $480 billion in market value from that index alone. Broader Chinese equities have lost about $2.4 trillion since May, according to Bloomberg, and the CSI 300 has entered bear market territory with a decline of about 20% from its June peak. Some AI chipmakers and optical suppliers fell 50–60% from highs, and state-backed funds reportedly intervened to stem losses.\n\nThe selloff reflects a combination of extreme valuations, the threat of U.S. export restrictions on Chinese AI/data-center suppliers, and an unwinding of speculative retail buying. AI stocks reached roughly 42% of China's market capitalization and 57% of turnover, according to Goldman Sachs, while the STAR 50 was still trading around 100 times trailing earnings versus about 30 times for the Nasdaq 100. Beijing's effort to build a “slow bull” market was overwhelmed by a “speculative crazy bull,” as Reuters put it, and the bubble has now burst.\n\nChina's STAR 50 index, a tech-heavy benchmark on the Shanghai Stock Exchange, has fallen about 40% since June/July. Roughly $480 billion was erased from that index alone, and overall Chinese equities have lost about $2.4 trillion since May. Reuters published analysis saying China's AI bubble has burst; Morgan Stanley warns of another 10–15% downside. This is speculative market commentary about a Fed meeting and possible market reactions. There is no single checkable factual claim beyond the meeting timing, which is not the significant part of the post. NAMES: FOMC = Federal Open Market Committee; Kevin Warsh = Federal Reserve Chair in this context. POST 2114273205451977044: NOCLAIM Duplicate of the previous post; speculative commentary about Fed policy and market reactions. NAMES: FOMC = F","publishedAt":"2026-10-27T16:05:08.366Z","channel":{"id":"money","name":"Oncast Money","language":"en"},"show":"Money Lunch","verification":{"status":"verified","leadVerdict":"TRUE","notes":"TRUE: China's STAR 50 index, a tech-heavy benchmark on the Shanghai Stock Exchange, has fallen about 40% since June/July. Roughly $480 billion was erased from that index alone, and overall Chinese equities have lost about $2.4 trillion since May. Reuters published analysis saying China's AI bubble has burst; Morgan Stanley warns of another 10–15% downside. This is speculative market commentary about a Fed meeting and possible market reactions. There is no single checkable factual claim beyond the meeting timing, which is not the significant part of the post. NAMES: FOMC = Federal Open Market Committee; Kevin Warsh = Federal Reserve Chair in this context. POST 2114273205451977044: NOCLAIM Duplicate of the previous post; speculative commentary about Fed policy and market reactions. NAMES: FOMC = F\nSource: Reuters via [investing.com](https://www.investing.com/news/economy-news/analysisin-china-the-ai-bubble-has-already-burst-4972445), The Guardian, SCMP NAMES: STA (https://x.com/WatcherGuru/status/2115111083656548585)","claims":[{"verdict":"TRUE","summary":"China's STAR 50 index, a tech-heavy benchmark on the Shanghai Stock Exchange, has fallen about 40% since June/July. Roughly $480 billion was erased from that index alone, and overall Chinese equities have lost about $2.4 trillion since May. Reuters published analysis saying China's AI bubble has burst; Morgan Stanley warns of another 10–15% downside. This is speculative market commentary about a Fed meeting and possible market reactions. There is no single checkable factual claim beyond the meeting timing, which is not the significant part of the post. NAMES: FOMC = Federal Open Market Committee; Kevin Warsh = Federal Reserve Chair in this context. POST 2114273205451977044: NOCLAIM Duplicate of the previous post; speculative commentary about Fed policy and market reactions. NAMES: FOMC = F","sourceName":"Reuters via [investing.com](https://www.investing.com/news/economy-news/analysisin-china-the-ai-bubble-has-already-burst-4972445), The Guardian, SCMP NAMES: STA","sourceUrl":"https://x.com/WatcherGuru/status/2115111083656548585","claim":"JUST IN: 🇨🇳 China's tech stock index \"STAR 50\" has now crashed 40% since June as bear market continues. Trillions of dollars have been wiped from China's stock markets in recent months. Yesterday, Reuters reported that China's AI bubble has \"burst.\" Morgan Stanley also https://","author":"Watcher.Guru (@WatcherGuru)"}]},"sources":[{"url":"https://x.com/WatcherGuru/status/2115111083656548585","name":"Reuters via [investing.com](https://www.investing.com/news/economy-news/analysisin-china-the-ai-bubble-has-already-burst-4972445), The Guardian, SCMP NAMES: STA","kind":"x","verdict":"TRUE","author":"Watcher.Guru (@WatcherGuru)"}],"url":"https://oncast.fm/story/1793117108366-money-segment-china-s-ai-bubble-bursts-2-4-trillion-gone","listenUrl":"https://oncast.fm/c/money","attribution":{"publisher":"Oncast","site":"https://oncast.fm","url":"https://oncast.fm/story/1793117108366-money-segment-china-s-ai-bubble-bursts-2-4-trillion-gone","cite":"Cite https://oncast.fm/story/1793117108366-money-segment-china-s-ai-bubble-bursts-2-4-trillion-gone and the original source links. Fact-check by Oncast (oncast.fm)."},"hostsSaid":[{"host":"Adam","text":"China's tech index just hit a milestone nobody wanted: down forty percent since June."},{"host":"Bill","text":"And that's the good news. The bad news is Morgan Stanley thinks there's another ten to fifteen percent to go."},{"host":"Adam","text":"Watcher Guru posted the number a minute ago. The STAR 50, that's Shanghai's tech-heavy board, has been in freefall since the summer."},{"host":"Bill","text":"Forty percent. And this is the index Beijing wanted to be its answer to the Nasdaq."},{"host":"Adam","text":"The numbers behind it are brutal. Almost half a trillion dollars erased from that one index. Two point four trillion from Chinese stocks since May."},{"host":"Bill","text":"Two point four trillion. That's not a correction, that's a verdict."},{"host":"Adam","text":"Reuters ran the analysis yesterday: China's AI bubble has burst. Not is bursting. Burst."},{"host":"Bill","text":"And here's the part that should scare people. AI stocks were forty-two percent of China's entire market value. Fifty-seven percent of all trading."},{"host":"Adam","text":"That's not a stock market with some AI companies. That's an AI casino with a stock market attached."},{"host":"Bill","text":"And the valuation! The STAR 50 was trading at a hundred times earnings. The Nasdaq is around thirty. A hundred times!"},{"host":"Adam","text":"So when the music stopped, there was nothing underneath. Some AI chipmakers and optical suppliers fell fifty, sixty percent from their highs."},{"host":"Bill","text":"And Beijing tried to build what they called a slow bull market. Instead they got, in Reuters' words, a speculative crazy bull."},{"host":"Adam","text":"Now the state-backed funds are reportedly stepping in to stop the bleeding. That's the playbook."},{"host":"Bill","text":"And it won't work. You can't prop up a bubble that's already popped. The air's gone."},{"host":"Adam","text":"Morgan Stanley says another ten to fifteen percent downside before it bottoms. UBS says sentiment won't recover soon."},{"host":"Bill","text":"But here's where I'll push back on the doom. Goldman Sachs still has dozens of Chinese AI stocks on its buy list."},{"host":"Adam","text":"They do? After a forty percent crash?"},{"host":"Bill","text":"They do. And BNP Paribas says there are buying opportunities for the careful. Careful being the key word."},{"host":"Adam","text":"I think careful is doing a lot of work in that sentence. When an index falls forty percent, careful usually means waiting."},{"host":"Bill","text":"Or it means the market finally starts separating companies with real revenue from the ones that just have a story about AI."},{"host":"Adam","text":"That's the real lesson here. A hundred times earnings was never sustainable. Not in Shanghai, not anywhere."},{"host":"Bill","text":"And the timing matters. This isn't happening in a vacuum. The Fed meets in two days, and the whole world is watching."},{"host":"Adam","text":"Speaking of which, Crypto Rover is out with a post that's getting a lot of attention. FOMC in fifty hours, and he says Kevin Warsh is completely trapped."},{"host":"Bill","text":"Completely trapped. That's one way to describe running the Federal Reserve."},{"host":"Adam","text":"His argument: oil is rising, inflation is hot, the labor market is weak. Cut rates and markets go parabolic. Hold and they stay flat. Hike and they crash."},{"host":"Bill","text":"So every possible outcome, and he's covered them all. That's not analysis, that's a menu."},{"host":"Adam","text":"It's the rare forecast that can't be wrong. Whatever happens, he called it."},{"host":"Bill","text":"But the underlying point is fair. Warsh is in a genuinely tough spot. Oil's up, inflation's sticky, and the jobs market is softening."},{"host":"Adam","text":"One reply from a trader named Leo put it well: cut and risk looking soft on inflation, hike and risk breaking the labor market."},{"host":"Bill","text":"That's the dilemma in one sentence. And I don't envy the guy making that call."},{"host":"Adam","text":"I'll say this: the market's already pricing in a lot of uncertainty. Bitcoin's been tracking U.S. stocks lower, and now there's a new wrinkle."},{"host":"Bill","text":"Wu Blockchain posted that QCP Capital is warning about AI infrastructure credit stress spilling into equities and crypto."},{"host":"Adam","text":"The claim is that rising financing risks in AI infrastructure are hitting both markets. We haven't independently confirmed the report, but the logic tracks."},{"host":"Bill","text":"It tracks because we just spent five minutes talking about China's AI bubble bursting. Credit stress doesn't stay in one country."},{"host":"Adam","text":"And when AI infrastructure loans start looking shaky, the banks that made them get nervous. Nervous banks pull back. Everything slows down."},{"host":"Bill","text":"That's the transmission mechanism. It's not just a China story. It's a global credit story."},{"host":"Adam","text":"Meanwhile, a smaller story that caught my eye. Ken Tumin posted his top five online savings accounts by yield."},{"host":"Bill","text":"Top five savings accounts. After talking about a two trillion dollar wipeout, this feels almost quaint."},{"host":"Adam","text":"But it matters for regular people. FourLeaf Federal Credit Union has a new savings account at the top of the list."},{"host":"Bill","text":"And the thread tracks how online savings and money market yields have changed since the Fed started cutting rates back in September 2024."},{"host":"Adam","text":"That's the quiet story. When the Fed cuts, the yield on your savings account follows. Slowly, but it follows."},{"host":"Bill","text":"And if Warsh holds rates this week, those yields stay put a little longer. If he cuts, they drift down again."},{"host":"Adam","text":"So the FOMC decision isn't just about markets. It's about what your emergency fund earns while you sleep."},{"host":"Bill","text":"One more quick one from the Telegram wires. FinancialJuice says Gazprom's CEO met with Iran's national gas company."},{"host":"Adam","text":"That's unconfirmed, but if true, it's Russia and Iran getting cozier on energy. Two of the world's most sanctioned gas producers."},{"host":"Bill","text":"Not a lot of buyers for their gas in the West. So they sell to each other, or try to build pipelines to places that won't sanction them."},{"host":"Adam","text":"It's a reminder that energy politics never really sleep, even when the market's focused on the Fed."},{"host":"Bill","text":"And on that note, the Fed decision is coming. Fifty hours, if Crypto Rover's math is right."},{"host":"Adam","text":"We'll be watching. And we'll be back with more after this."}]}