China’s CSI 300 entered a technical bear market on Thursday, October 22, 2026, after falling 20% from its June peak, with selling extending across 10 consecutive weeks.
Key Takeaways
- The CSI 300 fell more than 1% on Thursday and had lost nearly 3% so far this week.
- An offshore trust tax deadline may have encouraged selling, while weak demand and slow earnings growth weighed on sentiment.
- China Market Research Group’s Shaun Rein expects further pressure but argues the sell-off is excessive.
Table of Contents
- CSI 300 decline reaches bear-market threshold
- Tax deadline adds to economic concerns
- Further selling risks meet a recovery argument
CSI 300 decline reaches bear-market threshold
The index, which tracks the 300 largest stocks listed on the Shanghai and Shenzhen exchanges, has now lost one-fifth of its value from its June high. Thursday’s decline pushed mainland shares into technical bear-market territory after a prolonged run of weekly losses.
Tax deadline adds to economic concerns
Beijing set October 22 as the deadline for wealthy individuals to declare and pay offshore trust income. This may have prompted some investors to sell stocks to raise cash. Market participants also cited more restrictive taxation policies as a near-term pressure on equities.
Sophie Altermatt, an economist at Julius Baer, said the government remained focused on technological advancement, industrial upgrading and greater self-sufficiency rather than boosting near-term growth.
China recorded its slowest economic growth in more than three years in the second quarter, alongside a multiyear property slowdown, persistent weakness in consumer demand and slow earnings growth.
Further selling risks meet a recovery argument
Shaun Rein, managing director at China Market Research Group, said geopolitical uncertainty, fears of an artificial intelligence bubble and deteriorating consumer confidence could bring further selling. He also said China’s large retail-investor base could amplify volatility.
Nevertheless, Rein considered the sell-off excessive, citing resilient exports and signs of recovering property prices in China’s largest cities. He characterised the downturn as a confidence crisis rather than an economic crisis and predicted a strong rebound in Chinese equities in 2027. That remains his forecast, not an established recovery.
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