In-Depth Analysis of the Reasons for the Broad Pre-Market Decline of Chinese Concept Stocks

Based on the latest pre-market data, popular Chinese concept stocks are showing a broad decline trend:

Stock Ticker	Company Name	Price Change	P/E Ratio	Sector
BABA	Alibaba Group	-2.86%	20.47	E-Commerce
NTES	NetEase	-2.48%	17.17	E-Commerce/Gaming
XPEV	Xpeng Motors	-3.02%	-31.09	New Energy Vehicles
LI	Li Auto	-1.96%	15.13	New Energy Vehicles
PDD	Pinduoduo	-0.19%	12.30	E-Commerce
JD	JD.com	-0.02%	9.73	E-Commerce
BIDU	Baidu	+1.47%	12.84	Content/AI
BILI	Bilibili	+0.70%	110.92	Content

• Declining stocks as a percentage: 75% (6 out of 8)
• Average decline of falling stocks: -1.76%
• The new energy vehicle sector posted the largest decline (-2.49%), while the content/AI sector rose against the trend (+1.08%) [0]

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Last night, the U.S. stock market saw a clear divergence, with the Nasdaq 100 Index falling by 1% at one point, mainly dragged down by declines in tech giants such as NVIDIA and Apple [1]. This “profit-taking after sharp gains” phenomenon reflects:

• Profit-taking pressure
  : After the 2025 AI boom drove sharp gains in tech stocks, investors chose to lock in profits ahead of earnings season
• Capital rotation
  : Defense stocks surged after Trump called for increasing the 2027 defense budget to $1.5 trillion, leading to capital outflows from the tech sector [1]

Xpeng Motors (-3.02%) and Li Auto (-1.96%) led the decline, reflecting:

• Easing price wars but uncertain demand
  : Data from the China Passenger Car Association shows that the number of price-cut models in 2025 decreased year-over-year, but the market has doubts about the sustainability of demand growth in 2026 [2]
• Valuation digestion pressure
  : After the sharp gains in the new energy vehicle sector from 2024 to 2025, it faces the test of earnings realization

• China-U.S. relationship variables
  : Although there are reports that China may approve imports of NVIDIA’s H200 chips, the long-term uncertainty of trade frictions still suppresses risk appetite [3]
• Changes in regulatory environment
  : The trend of Chinese concept stocks voluntarily delisting from U.S. stock exchanges continues, with Zeekr, Dada Nexus, and OneConnect Financial Technology delisting one after another [4]

Wall Street summarized its 2026 outlook with the word “precarious”, reflecting [5]:

• The S&P 500 Index has risen by approximately 80% cumulatively from 2023 to 2025, and its valuation is already at a historical high
• The market has increasing doubts about the returns on AI investments
• “When the market reaches a broad consensus that ‘everything is good’, it is wise to maintain a skeptical attitude”

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Market	Hang Seng Tech Index P/E	Nasdaq P/E	Valuation Divergence
Current Level	~23x	~45x	Hong Kong stocks undervalued by ~50%
Historical Percentile	34.41%	Exceeds historical highs	-

Hong Kong-listed tech stocks have a significant valuation discount relative to U.S.-listed tech stocks, but this discount may reflect deeper differences in market expectations [6].

• Foreign-dominated Hong Kong stock market
  : Foreign investors have increased their required risk premium for Chinese tech stocks and reduced their liquidity preference
• Retail-dominated A-share market
  : More sensitive to policy support, with themes such as AI and domestic substitution being favored [6]

• Bullish camp
  : UBS predicts the Hang Seng Tech Index will reach a target of 7,100 points by the end of 2026, and earnings growth in the AI application field of Chinese tech companies may reach as high as 37% [6]
• Bearish camp
  : Institutions such as JPMorgan believe that earnings reports are needed for verification, and the path to returns on AI investments is still unclear

• E-commerce sector
  : Average P/E ratio of approximately 15x, reflecting the valuation logic of a mature industry (JD.com has the lowest at 9.73x)
• New energy vehicles
  : Still in a state of loss or low profitability, the market gives a growth premium but divergences are widening
• Content/AI sector
  : Baidu and Bilibili rose against the trend, showing that the AI narrative remains a core driving force

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: Pullback in U.S. tech stocks, capital profit-taking, geopolitical risk premium

:

1. Downward shift in valuation center
   : The discount of Chinese concept stocks relative to U.S. stocks may become the norm, reflecting a “national security premium”
2. Earnings verification is king
   : Whether AI investments can be converted into actual earnings growth will be the key to valuation recovery
3. Strengthened policy-driven market characteristics
   : Domestic policy support (such as the Ministry of Industry and Information Technology including Huawei and Cambricon in the government procurement list) has become an important support [6]

:

• Focus on targets with the dual characteristics of “policy bottom + valuation bottom”
• AI application layer companies may outperform infrastructure providers
• For new energy vehicles, carefully select leading companies with the ability to improve profitability

Market sentiment towards Chinese tech stocks is shifting from a “growth narrative” to “earnings verification”, and the valuation logic is also shifting from a simple track premium to a composite framework that comprehensively considers policy support, earnings certainty, and geopolitical risk premium.

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[0] Jinling API Real-Time Market Data (January 9, 2026)

[1] China Fund News - “U.S. Tech Stocks Fall, Defense Stocks Surge” (https://www.chnfund.com/article/ARc07cfa98-cb52-0b44-5e24-3a1eb08cc275)

[2] Wall Street CN - “Wall Street CN Breakfast FM-Radio | January 9, 2026” (https://wallstreetcn.com/articles/3762898)

[3] Bloomberg - “Alibaba Shares Rise as China Plans Approval of H200 Imports” (https://www.bloomberg.com/news/articles/2026-01-09/alibaba-shares-rise-as-china-plans-approval-of-h200-imports)

[4] Securities Times - “2025 Chinese Concept Stocks ‘Trio’: Delisting, Entry, and Return” (https://www.stcn.com/article/detail/3560608.html)

[5] Sina Finance - “Wall Street Uses One Word to Predict 2026: ‘Precarious’” (https://finance.sina.com.cn/stock/marketresearch/2025-12-24/doc-inhcxizc9641042.shtml)

[6] Eastmoney - “Trends of China’s A-Shares, Hong Kong Stocks, and Tech Stocks from December 15-19, 2025” (https://emcreative.eastmoney.com/app_fortune/article/index.html?artCode=20251213104803933139570)