Global AI trade revival brightens outlook for Chinese tech stocks after record sell-offs

Web Desk August 7, 2026

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Global AI trade revival brightens outlook for Chinese tech stocks after record sell-offs

The outlook for Chinese technology stocks has improved after a sharp monthly sell-off, as the global rebound in the artificial intelligence trade regains momentum, speculative positions are flushed out and falling oil prices ease fears of monetary tightening.

The tech-heavy Star Market 50 Index, which features major chip manufacturing companies on the Shanghai Stock Exchange, is on track to close the week up by about 6 per cent. This partial recovery follows a 26 per cent slump in July, its steepest monthly decline on record.

The rebound has coincided with a renewed surge in AI shares in the United States, which pushed the S&P 500 and the Dow Jones Industrial Average to record highs this week. That revived enthusiasm could help restore investor sentiment on Chinese tech stocks, given the recent close correlation between the two markets.

US markets have benefited as concerns over Federal Reserve tightening fade, while de-escalating tensions in the Middle East have sent oil prices lower and corporate earnings reports show AI demand remains robust.

“Chinese stocks are now entering the stage of rebuilding confidence after the overheating risk was largely defused,” said Song Yiwei, an analyst at Bohai Securities. “The market is expected to bottom out, as the earnings season for interim reports may give fundamental support for funds’ reallocation.”

The rout in Chinese tech stocks followed a more than 60 per cent surge in the Star Market 50 this year, while leveraged traders pushed bets to record highs to maximise exposure to AI plays. As the sell-off deepened, Beijing’s securities regulator pledged stabilising measures while state-backed investment vehicles poured at least 60 billion yuan (U$S8.9 billion) directly into the market.