Recent developments in global markets point to serious upheaval in two of the world’s key economies: China and the United States are facing large-scale market corrections and falling indices, centered around the technology sector and artificial intelligence (AI).
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China: Market collapse and a “bear trend”
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China's stock market is experiencing one of its deepest crises in recent times:
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Scale of losses: Since their May peaks, the entire mainland stock market and key indices have lost more than $3.5 trillion.
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Technology sector: The artificially inflated SSE Star 50 technology index has plunged by approximately 40% (a loss of around $480 billion).
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The CSI 300 Index (the main indicator of the largest companies in Shanghai and Shenzhen) has officially entered a “bear market,” falling by 20%.
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Causes: In addition to the bursting of the speculative “bubble” in the domestic high-tech market, the situation is being exacerbated by intense geopolitical and technological competition with the US, as well as new restrictions imposed by the US Treasury on investments in China.
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US: Doubts about AI investments and a Wall Street slump
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The US market is also under considerable strain, which became sharply apparent at the end of October:
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Index declines: Trading on Wall Street ended with a significant drop: the technology-heavy Nasdaq Composite fell nearly 2.86%, while the S&P 500 lost 1.82% (the worst trading day for US indices since June).
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The cause — disappointment with AI: Investors have begun to question en masse whether the massive investments in artificial intelligence will pay off quickly. Companies are spending trillions on AI infrastructure, but the market is demanding quick financial returns that have yet to materialize.
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Hit to the giants: Shares of leading technology corporations came under heavy selling pressure (with Intel, Nvidia, and other sector leaders among those hit by catastrophic declines).
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The global domino effect
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The US AI crisis immediately reverberated across international exchanges. Asian and European markets also fell: Japan's Nikkei 225 dropped by more than 2%, South Korea's Kospi fell by 3.5%, and European technology markets also posted sharp declines.
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The situation highlights the global economy's vulnerability to overheating in the high-tech sector and escalating trade and technology tensions between Washington and Beijing.
