In recent days, the A-share market has witnessed a thrilling roller coaster ride, with over 4700 stocks collectively plummeting and trading volume soaring to a historic high on the 27th. The stock price of AI chip giant, Cambricon Technologies, briefly surpassed that of Kweichow Moutai, triggering market panic selling. On the 28th, the stock market surged once again.
At the same time, nearly 60 listed companies have been enthusiastically engaging in “stock-for-stock” investments, causing deep concerns within the industry. Experts have pointed out that behind these anomalies lie not only the deep-rooted structural issues of the Chinese stock market but also the core contradiction of fragile investor confidence.
On the afternoon of August 27th, the A-share market staged a dramatic “tale of two extremes.” The Shanghai Composite Index soared to a high of 3887.20 points intraday, only to rapidly plunge, ending with a sharp 1.76% drop, barely holding above the psychological barrier of 3800 points. The Shenzhen Component Index and the ChiNext Index also swiftly reversed after reaching their peak levels, dropping by 1.43% and 0.69% respectively.
The spark of market turbulence pointed towards the AI chip leader, Cambricon Technologies. Its stock price soared to 1464.98 yuan intraday, surpassing the long-standing “A-share king,” Kweichow Moutai. However, this milestone moment of “topping the throne” quickly turned into a signal of market collapse, once again validating the “Moutai curse” with astonishing precision.
On August 28th, Cambricon Technologies’ stock price surged again, surpassing Kweichow Moutai’s closing price to officially claim the title of A-share king. Amid the stock market’s fervent pursuit, Cambricon’s P/E ratio has soared to 595 times, revealing operational risks and potential bubble crises.
In a statement that evening, Cambricon Technologies warned of the risk of its stock price deviating from the current fundamentals, cautioning investors about the elevated risks of trading. It’s worth noting that as a leading Chinese AI computing chip company, Cambricon Technologies incurred a loss of 452 million yuan last year, with accumulated losses exceeding 5.4 billion yuan over the past eight years.
Regarding Cambricon Technologies surpassing Moutai, current affairs commentator Wang He, in an interview with Epoch Times, pointed out, “Moutai, as China’s top stock, when other stock prices exceed it, often leads to significant problems, which has become a phenomenon.”
He further analyzed, “This phenomenon reflects the abnormal and distorted state of the Chinese stock market. Stocks like Moutai inherently carry strong political symbolisms. The fact that companies like Moutai, a consumption-focused liquor company, can remain the market leader for a long time shows that there are structural issues within the entire Chinese stock market.”
Furthermore, against the backdrop of intense market fluctuations in China, the trend of listed companies engaging in speculative stock investments has escalated. According to incomplete statistics, nearly 60 listed companies have announced plans or are already utilizing their own funds for securities investments, with companies like Leo Group, Fangda Carbon, and Seven Wolves surpassing the 1 billion yuan mark in investment scale.
These companies engaging in capital operations mainly focus on traditional manufacturing industries such as electrical equipment, construction decoration, and steel.
It’s noteworthy that the Chinese construction decoration and steel industries have been experiencing long-term losses, especially with the steel industry’s deepening losses since last year, sustained weak demand, significant decline in profitability, and intense price wars leading to the bankruptcy of some factories.
Facing the dilemma of their core businesses, some companies are attempting to turn the tide through securities investments. For example, Leo Group has garnered substantial returns by investing in Ideal Automobiles. Similarly, Seven Wolves obtained non-recurring income of 236 million yuan in 2024 through securities investments, effectively offsetting the decline in their core business.
However, not all companies engaging in “cross-border stock speculation” have experienced smooth sailing. Fangda Carbon, for instance, faced setbacks in their securities investments in both 2022 and 2024.
“This is a very scary situation. Many listed companies in China, after going public through various means, treat the stock market as a cash-out machine. Instead of focusing on their core businesses, they engage in financial operations with large amounts of funds, entering the capital market for speculation. This deteriorates the quality of listed companies and exacerbates the stock market’s bubble,” Wang He expressed deep concerns about this phenomenon.
Regarding the recent unusually active market performance, some analysts claim that retail investors are dominating the onshore market in China. However, many data show that retail investors’ enthusiasm remains subdued.
A recent report from Caixin indicated that retail investors have not massively entered the market, with 1.9636 million new A-share investors added in July 2025, a 71% increase year-on-year but still far below the peak of account openings during the bull markets in October 2024 and 2015.
Citing analyst Cao Liulong from West Securities, Economic Observer reported that even though the Shanghai Composite Index reached a new high since 2021, residential funds have yet to rush into the market. Retail participation lags behind the “924 trend” last year, showing a significant gap from the bull markets of 2015 and 2020. Netease pointed out, “When retail investors truly enter the market on a large scale, it is often the most dangerous period, nearing the end of the market.”
The personal experience of Mr. Wu, a freelancer in Guangzhou, is quite representative. He told Epoch Times, “I haven’t traded stocks for a long time. My experience is that when the market rises, I don’t make money either. If the market is bad, then I lose a lot. The reason many people enter the stock market is because they want to make quick money, but reality often disappoints.”
Analyzing this phenomenon, Wang He provided insights, “The Chinese stock market used to be dominated by retail investors, but over the years, it has experienced multiple market adjustments. Retail investors have developed an instinctual cautious attitude towards the stock market. Except for a small portion of new investors, most investors who have experienced market fluctuations have chosen to adopt a rational wait-and-see approach.”
Chinese legal scholar Chen Ming (pseudonym) delved into the root of the problem from an institutional perspective. He told Epoch Times, “There are structural defects in the Chinese stock market, both intrinsic and systemic. The 2015 market adjustment has long-lasting implications on investor confidence, leading many retail investors to maintain a cautious stance.”
He advised investors to “maintain a clear mindset and approach investment decisions rationally.”
Industry authorities generally believe that the seismic activity in the A-share market is more like the combined result of multiple macroeconomic data and market expectations. Cambricon’s “one-day rise to the top” and the subsequent collective fall are seen as signs of triggering the market’s fragile nerves.
Nomura has warned that as the stock market continues to surge, signs of economic weakening in China have emerged in the second half of the year, with excessive leverage and potential “bubble” risks accumulating. Observers are closely watching the fundamentals of the Chinese economy and corporate profits.
Wang He conducted a comprehensive analysis of the complex game between policy expectations and market performance, stating, “From a policy perspective, maintaining market stability within a relatively stable range is a fundamental goal. However, the market bottom often lags behind policy expectations.”
Experts believe that the challenges facing the current market extend far beyond technical short-term adjustments, encompassing essential issues like rebuilding investor confidence and fundamentally improving market mechanisms. The phenomenon of listed companies excessively relying on securities investments while neglecting the development of their core businesses, the periodic recurrence of market anomalies like the “Moutai curse,” all deeply expose substantial deficiencies in the optimization of China’s stock market structure and institutional construction.