China’s Stocks Aren’t Broken, The STAR Board Is Just Cooling Off
When people ask why China’s stock market seems to go nowhere, look beyond the headline index.
The Shanghai Composite has been around since 1991, surviving multiple boom-and-bust cycles along the way. Today’s correction, however, is concentrated in a much smaller corner of the market: the STAR Board.
📉 The STAR Board Pullback
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The STAR 50 Index has fallen roughly 40% from its highs.
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That follows a rally of about 260% in less than two years.
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It now trades at roughly 43x forward earnings for 2027, implying expectations for substantial earnings growth.
📊 Zoom Out to the Bigger Picture
The STAR Board represents only a portion of China’s overall equity market. Meanwhile, the broader market is trading at around 10x earnings, according to the estimates cited here.
That valuation gap helps explain why a sharp correction in Chinese technology stocks does not automatically mean the entire market is in an AI bubble unwind.
💡 The Bull Case
If earnings growth catches up with valuations, the STAR Board could find support after its steep decline. And with the broader market trading at a much lower multiple, the Shanghai Composite may have more valuation support than the recent tech selloff suggests.
But a bottom is never guaranteed. Earnings expectations, investor confidence, and policy shifts will all matter.
📌 China ETFs to Watch: $iShares MSCI China ETF(MCHI)$ $KraneShares Bosera MSCI China A 50 Connect Index ETF(KBA)$ $iShares China Large-Cap ETF(FXI)$ $KraneShares SSE STAR Market 50 Index ETF(KSTR)$ $iShares MSCI China A ETF(CNYA)$
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