(Bloomberg) -- A measure of investor sentiment on China technology hardware is flashing its most bearish reading in over four years as the red-hot rally in chip stocks rapidly cools.
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The Star 50 Index's fear/greed indicator, which measures selling strength relative to buying strength, has fallen to its most negative level since April 2022. The semiconductor-heavy gauge has dropped 16% from its June record high as investors position for the blockbuster listing of CXMT Corp.
The reversal in sentiment also comes as concerns grow over stretched valuations following a record-setting quarter for the index. A recent pullback in high-flying memory shares globally has amplified those fears, after massive rallies drove a surge in volatility.
For some investors, the sheer scale of CXMT's $9.8 billion initial public offering — the nation's second-largest ever — is itself a warning sign. Large, highly anticipated listings have often coincided with near-term market peaks. Meanwhile, China's plans for tech self-sufficiency will be on display as the World AI Conference kicks off in Shanghai on Friday with a keynote speech from President Xi Jinping.
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