China’s equity market closed weaker on Tuesday, with headline indices retreating amid broad-based selling and targeted pockets of buying. The Shanghai Composite fell 0.3%, the Shenzhen Component slid 1.22% and the tech-heavy ChiNext (创业板) index dropped 1.83% by the end of the session, after intraday swings that saw the ChiNext down more than 2% at one point.
Trading activity picked up: combined turnover on Shanghai and Shenzhen exchanges reached ¥1.85 trillion, about ¥56.8 billion higher than the previous trading day, even as market breadth deteriorated — more than 3,300 stocks closed lower. The pattern of heavy volume alongside falling indices underlines a market rotating away from many small-cap names and short-term momentum trades.
Yet the day was characterised by striking sector divergence. Chemicals and several beaten-down property names bucked the market trend, with multiple small- and mid-cap companies hitting daily circuit limits. Notable limit-up movers included Hongbaoli (红宝丽), Shandong Heda (山东赫达) and other specialty chemical manufacturers, while property-related stocks such as Joy City (大悦城), Wo Ai Wo Jia (我爱我家) and Chengtou Holdings (城投控股) also surged to limits as bargain hunters and policy-watchers piled into the sector.
Technology sub-themes showed mixed fortunes. AI application plays staged intraday strength — firms such as Jiayun Technology (佳云科技) and Yue Media (粤传媒) moved to limits — and storage-chip names continued to attract attention, with Puran and Baiwei Storage making fresh highs. By contrast, the commercial space concept experienced steep losses, with stocks including Hualing Cable (华菱线缆) and Aerospace Power (航天动力) hitting limit-downs amid profit-taking and sector rotation.
The session's split personality reflects the twin forces shaping China’s market: sustained investor appetite for areas tied to structural themes like AI and domestic chip supply chains, alongside episodic flurries into cyclical, policy-sensitive sectors such as property and chemicals. At the same time, the heavy breadth weakness and episodic collapses in speculative themes underscore how quickly retail-driven rallies can reverse when wider risk appetite fades.
For international investors, the day offers a reminder that China’s markets remain reactive to domestic liquidity and policy expectations rather than global flows alone. Selective rallies in property and chemicals should be read as tactical, not necessarily signalling a durable recovery across the market; they mirror localized re-pricing and short-term flows into oversold names, while systemic risks and valuation disparities persist.