China and Hong Kong Stocks: CSI 300 and Hang Seng — 2026-10-26
The CSI 300 index has officially entered bear market territory, falling 20% from its June peak, while the Hang Seng Index suffered its steepest decline in seven months. Despite a $3.5 trillion market cap loss since May and fading hopes for immediate stimulus, sovereign wealth funds have surged their investments in the region by 190%, and the National Team has stepped up ETF buying to stabilize blue-chip shares.
China and Hong Kong Stocks: CSI 300 and Hang Seng — 2026-10-26
Top developments
CSI 300 Enters Bear Market Territory
On October 22, the benchmark CSI 300 index confirmed its entry into a bear market after extending its decline to 20% from its June peak. This prolonged selloff has erased approximately $3.5 trillion in market value since May, driven by earnings misses across the technology, banking, and electric vehicle sectors. The decline has also impacted regional markets, with losses spreading to stock exchanges in Korea, Japan, and Taiwan.
Hang Seng Posts Biggest Drop in Seven Months
The Hang Seng Index recorded its largest decline since March as investors reacted to shrinking expectations for strong fiscal stimulus from Beijing. The index fell 1.32% on October 20, with the Hang Seng Tech Index dropping 1.52%. On October 23, however, the market saw a partial rebound, with the Hang Seng closing up 0.84% as mainland and Hong Kong equities rallied together.
National Team Increases ETF Buying
Chinese stocks swung into gains on October 23 as turnover in exchange-traded funds favored by the "National Team" (state-backed funds) increased significantly. The China Securities Regulatory Commission (CSRC) Chairman Wu Qing reaffirmed the commitment to a "stable market," while Central Huijin and other state entities expanded their holdings in stock-based ETFs. This concerted buying helped the Shanghai Composite rise 0.89% and the ChiNext Index jump 4.16% on the same day.
Local view
Local media highlighted a dramatic "miracle rebound" on October 23, where the Shanghai Composite recovered from below 3,600 points to close near 3,690. 21st Century Business Herald noted that while the broader market faced pressure, specific sectors like robotics and financials drove the upside, with the ChiNext ETF seeing its highest trading volume since October 2024. Conversely, earlier in the week, Sina Finance reported that over 3,100 individual stocks fell on October 19, with real estate and agriculture sectors lagging while banks and military equipment held steady.
Context & numbers
- Market Value Loss: The Chinese stock market has shed $3.5 trillion in value since May.
- Sovereign Wealth Fund Activity: Investments by sovereign wealth funds in China and Hong Kong surged 190% following the earlier slump.
- Stock Connect Flows: Southbound turnover via the Shanghai-Hong Kong Stock Connect was reported at HK$46.2 billion on October 21, a decrease from HK$47.9 billion the previous day.
- US-China Gap: Chinese stocks are currently trailing U.S. equities by the widest margin in recorded history, with state-backed funds noted as being relatively inactive compared to previous stabilization efforts.
On the radar
- Q3 Earnings Season: As of October 26, 1,028 companies have disclosed third-quarter reports, with 176 showing net profit growth exceeding 100%.
- US Investment Restrictions: The U.S. Treasury released a new proposed rule on outbound investment restrictions on October 23, drawing scrutiny from Beijing.
- Tech Sector Volatility: The Hang Seng Tech Index continues to face pressure, with recent sessions showing significant swings driven by AI-related sentiment and global tech stock movements.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
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