China Stock Markets Tank in October as Earnings Disappoint, Tech Selloff Continues

China's stock markets ended a bearish October with their worst performance of the month taking place this week, as company earnings reports generally disappointed investors and a global selloff in tech shares gained momentum.

The benchmark Shanghai Composite Index declined 6.3 percent in October, with a 2.5 percent decline this week. The Shenzhen Component Index tanked 15.9 percent for the month, down 7.2 percent this week. And the outlook is dim when trading resumes on Monday after major Wall Street markets sank deeper into the red on Friday.

In China, disappointing third-quarter corporate reports, especially in the tech sector, propelled price retreats this week. The tech-focused ChiNext in Shenzhen tumbled 10 percent in the last five trading days, and the Nasdaq-style STAR Market in Shanghai plunged 13.7 percent. Hong Kong's Hang Seng Index managed a 1.5 percent gain on Friday and added 0.87 percent for the week.

"The sectors of artificial intelligence and chips are the hardest-hit as financial results of some tech giants, both domestic and abroad, turned out to be much lower-than-expected," said Huang Wenjing, an analyst with China International Capital Corp. "That triggered an outflow of capital as well as confidence,"

Shares in Unitree, China's most high-profile robot maker, fell 4.8 percent on Thursday and 2.3 percent on Friday after it said third-quarter profit dropped 17 percent from a year earlier to 113 million yuan (US$17 million) on a surge in capital spending.

Even positive earnings failed to lift investor sentiment. Shares of Moore Threads, a designer of graphics processing units and one of the so-called "China Nvidia firms," dived 12.5 percent on Thursday despite a swing to net profit of 49.3 million yuan in the third quarter from a year-earlier loss. And Zhongji Innolight, a maker of high-speed optical modules, reported a 174 percent surge in third-quarter net profit from a year earlier to 8.6 billion yuan, but its shares decreased 5 percent.

"The surprising responses reflect the perception in that these industry leaders are still performing below market expectations and don't offer enough sense of security for investors," Huang said.

On the plus side, banking shares rose as China's five biggest lenders, which rank among the largest in the world, posted some of their strongest profit growth in at least four years, continuing a steady recovery. Net interest margins, a key indicator of profitability, have stabilized and asset quality has strengthened even amid a slower economy. Profit growth in the first nine months of 2026 was driven partly by the repricing of higher-cost deposits and government subsidies on mortgages that lowered funding costs. Shares in Industrial and Commercial Bank of China, the largest bank in the world by assets, rose 1.5 percent on Friday. The bank reported a 9.2 percent gain in nine-month operating revenue, with profit rising 5.8 percent. Shares in Agricultural Bank rose 1.3 percent after the lender said three-quarter profit rose 6.8 percent and operating income increased 12.5 percent.

Slumping stock markets on the Chinese mainland, however, weighed heavily on shares of insurers that invest money in stocks and on brokerages that rely on stock trading fees. Shares in Shenwan Hongyuan Securities fell 0.7 percent after the Chinese brokerage said third-quarter revenue fell 48.5 percent to 4 billion yuan, reflecting the 12.5 percent quarterly decline in the CSI 300 Index, which tracks the top shares on the Shanghai and Shenzhen stock markets. People's Insurance company shares slipped 0.3 percent ahead of the insurer's report of a third-quarter loss as stock investment returns fell.

In the transport sector, Air China shares fell 0.5 percent on Friday. The carrier turned to a third-quarter profit after losses in the two previous quarters, but profit was down 93 percent from a year earlier, largely on high jet-fuel prices triggered by the Iran war. On Friday, China Southern Airlines reported a third-quarter loss and China Eastern Airlines posted a 98 percent profit plunge.

Shares in BYD, China's largest new-energy vehicle maker, fell as much as 2.4 percent in Hong Kong intraday trading before clawing their way back to a 0.8 percent gain at the close. The automaker's shares began a decline this week after missing market expectations in third-quarter earnings.

Across Asia, South Korea's Kospi gained 3.3 percent this week but lost 18 percent in October, and Japan's Nikkei added 0.95 percent but fell 7 percent in the month.

On Wall Street, investors were stung by a series of disappointing earnings reports from big tech companies. The tech-heavy Nasdaq lost 2.9 percent on Friday, with chip giant Intel tanking almost 29 percent – its worst day since the 1970s. The company this week issued a weaker-than-expected outlook for the current quarter despite reporting a 21 percent increase in third-quarter sales. Amazon shares fell more than 1 percent after the online retail giant posted negative cash flow in the third quarter and maintained its 2026 capital expenditure forecast at US$220 billion. Alphabet shares shed 1.5 percent on Friday after suffering their worst day on record a day earlier, after the Google owner missed profit and revenue estimates for the third quarter. Chipmakers Nvidia, Advanced Micro Devices and Broadcom also tumbled. For the month, the Nasdaq dropped 5.3 percent, its steepest monthly decline since March 2025. The broad S&P 500 index lost 1 percent.