Sinking profits turn China’s $3.5 trillion stock rout into trap

China, the world’s second-largest equities market, has lost $3.5 trillion in value from a peak in May, compiled data shows. | REUTERS

Bloomberg

Oct 25, 2026

Pessimism has gripped Chinese stocks, with no end in sight for a deepening selloff as investors confront the realities of an economy that’s weak enough to erode corporate profits but not to trigger forceful new stimulus.

The world’s second-largest equities market has lost $3.5 trillion in value from a peak in May, compiled data shows. The rout intensified last week, pushing the onshore benchmark CSI 300 Index into a bear market and a technology sector gauge in Hong Kong toward erasing all its gains since Beijing’s sweeping growth support package two years ago.

At the heart of investor gloom is an unsettling realization that a protracted consumption slump and the race-to-the-bottom mentality among businesses is taking a heavier toll on earnings across industries from banks to electric car makers and AI model developers. Further darkening the outlook is the growing perception that Chinese leaders are in no rush to jump-start an economy that is slowing but at a tolerable speed.

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