dexinwin China’s A-share market came under renewed pressure on October 8, the first trading day after the National Day holiday, with high-valuation technology stocks leading the decline.
Lianxun Instruments, widely regarded as one of China’s most expensive A-share stocks, plunged sharply during morning trading. The stock fell more than 7% at one point to around 1,447 yuan per share, while its market capitalization declined by approximately 8.5 billion yuan compared with the previous trading session.
The decline was not an isolated move. It came amid a broad sell-off across the CPO and optical-chip sectors, two of the market’s strongest technology themes in recent months.
Changguang Huaxin and Yuanjie Technology both fell by the maximum 20% allowed on the STAR Market, while Dongshan Precision also hit its daily limit down. Sijia Photon and Dekeli fell more than 10%, while Tianfu Communication dropped more than 7%. Other major optical-communications companies, including Innolight and Zhongji Innolight, also moved lower.
Lianxun Instruments has become one of the most closely watched stocks in China’s technology market after an extraordinary rally following its listing.
The company debuted on the Shanghai Stock Exchange’s STAR Market on April 24, with an initial public offering price of just 81.88 yuan per share. Within only 14 trading sessions, its stock price had surged above 1,300 yuan. On May 18, it reached an intraday high of 1,361 yuan, briefly surpassing Kweichow Moutai and becoming the highest-priced stock in the A-share market at the time.
The speed and scale of the rally made the company a major focus of investor attention.
However, exceptionally strong price gains can also create substantial valuation risks. Once market sentiment changes, high-priced stocks that have experienced significant appreciation can become particularly vulnerable to profit-taking.
The latest sell-off also came against a challenging backdrop for global technology stocks.
U.S. Treasury yields have risen sharply, putting pressure on global growth-oriented assets. Semiconductor and optical-communications stocks in overseas markets have also experienced volatility. With technology valuations already elevated, higher interest rates can make investors more cautious about paying premium prices for future growth.
At the same time, investors are increasingly focused on supply-and-demand conditions across the optical-communications industry.
Optical chips are critical components of high-speed optical communication systems and are closely linked to the development of AI data centers and next-generation optical modules. Strong expectations for AI infrastructure investment have helped drive substantial gains across the sector.
But as valuations rise, the market tends to shift its focus from whether an industry has long-term potential to whether current share prices have already priced in too much future growth.
That distinction is particularly important for Lianxun Instruments.
The company’s share price has risen dramatically from its IPO level, meaning that expectations for its future growth are already extremely high. Even without a fundamental deterioration in its business, a reduction in market risk appetite or increased profit-taking could trigger significant valuation compression.
The latest decline also highlights a broader transformation in China’s stock market.
For years, Kweichow Moutai was widely viewed as the symbolic “stock king” because of its exceptionally high share price. Since 2025, however, artificial intelligence, semiconductors and optical communications have attracted increasing amounts of capital. Companies such as Cambricon, Yuanjie Technology and Lianxun Instruments have successively challenged Moutai’s position in terms of share price.
The changing identity of the “stock king” reflects the shift in investor preferences from traditional consumer leaders toward technology and AI-related growth companies.
Yet a high share price does not automatically mean that a company is overvalued, just as a low share price does not necessarily indicate an attractive valuation.
For a high-growth technology company such as Lianxun Instruments, the key factors remain its competitive position, order growth, profitability and ability to deliver the earnings growth that investors have priced into the stock.
Therefore, the most important question is not simply how much the stock falls in a single session. The larger issue is whether the market is beginning to reassess the valuation framework for the broader AI hardware and optical-communications industries.
If the current decline is primarily driven by short-term profit-taking and global market volatility, high-quality technology companies could eventually regain investor interest after valuations stabilize.
However, if demand expectations, product pricing or earnings forecasts undergo a sustained deterioration, the correction in high-valuation technology stocks could last much longer.
The October 8 session also showed significant capital rotation. While high-growth technology stocks came under pressure, some traditional and defensive sectors performed relatively better. This suggests that investors were not necessarily abandoning equities altogether, but were instead reassessing risk and moving toward areas offering different valuation and earnings characteristics.
For investors, the sharp decline in Lianxun Instruments serves as another reminder that after a popular technology theme has experienced a major rally, relying solely on market sentiment becomes increasingly risky.
Ultimately, stock prices must be supported by earnings and business fundamentals.
The decline of the A-share “stock king” can therefore be viewed as a broader stress test for high-valuation technology stocks. Whether investors return to AI-related growth companies after the correction or continue rotating toward lower-valued companies with more predictable earnings will be one of the key questions for the post-holiday market.
Risk disclaimer:This article is provided for news and information purposes only and does not constitute investment advice. Stock-market investment involves risks, and investors should make independent decisions according to their own circumstances.
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