China Is Cracking Down On “Stock Market Influencers” As AI Surge Overheats Market

Chinese regulators are tightening oversight of aggressive influencer promotions for investment products, worried that an AI-driven tech surge — encouraged by state policy — is overheating the market, according to Nikkei.

In late January, media reports said the China Securities Regulatory Commission (CSRC) penalized a fund firm, identified as Fund D, for paying unqualified online influencers to market its products. According to a CSRC document cited in reports, the firm “induced investors with incompatible risk tolerance” to buy high-risk offerings and “neglected professional compliance in pursuit of short-term growth.” The regulator did not comment.

The move reflects broader unease over market volatility. Nearly 4.91 million new mainland stock accounts were opened in January — the biggest monthly jump since October 2024 — as money poured into smaller tech names linked to AI, chips and aerospace themes.

While the blue-chip CSI 300 is up just 0.7% this year, smaller-stock gauges have surged. The CSI 500 has climbed 11.2%, and Shanghai’s tech-focused STAR board index has gained 10.5%. Some individual shares have skyrocketed: industrial equipment supplier Wuxi Autowell Technology is up over 120% year to date, while Puya Semiconductor and Focuslight Technologies have more than doubled. Supcon Technology has risen 65%.

One international brokerage analyst said the rally reflects limited alternatives — with low bond yields and weak property prices — rather than company fundamentals.

Speculation has also shaken commodity-linked products. Units of a Shenzhen-listed silver futures fund doubled in January, trading well above their underlying value as online guides touted quick arbitrage profits. UBS SDIC Fund Management halted new subscriptions on Jan. 28 “to protect the interests of fund unitholders,” and the exchange suspended accounts engaged in “abnormal trading behavior.” As silver futures fell, the fund’s units hit their 10% daily down limit for five consecutive sessions.

Beijing has promoted equity markets to advance technological self-reliance, easing listing rules and accelerating approvals for strategic sectors. Chip startup Moore Threads, for example, saw its shares jump fivefold on debut in December.

Nikkei writes that at the same time, officials are trying to contain excess speculation. At a January work conference led by CSRC chairman Wu Qing, regulators pledged to curb “excessive speculation and market manipulation” and “resolutely prevent drastic market fluctuations.” Managing retail sentiment is critical, as individual investors account for more than 80% of daily turnover.

Jason Lui of BNP Paribas said stability is key to attracting long-term capital. High volatility, he noted, risks drawing investors in at the wrong moments and reinforcing perceptions of boom-bust cycles.

Earlier, the CSRC fined influencer Jin Yongrong and barred him from the securities market for three years, accusing him of earning over 41 million yuan by promoting stocks to inflate prices before selling. Finance app Snowball Finance banned Jin and more than 20 other accounts.

Exchanges have also raised the margin trading deposit ratio from 80% to 100% to cool leverage. Meanwhile, ETFs associated with state-backed investors saw notable outflows, prompting speculation about official strategy.

Local governments continue pledging support for emerging sectors such as commercial aerospace, new materials and the so-called “low-altitude economy,” referring to drone services. A new national five-year plan is expected in March.

Regulators may face fresh tests after trading resumes on Feb. 24 following the Lunar New Year break, with robotics demonstrations set for the Spring Festival Gala and reports that DeepSeek and other AI developers plan new model releases during the holiday.