China’s equities closed mixed on Wednesday as a sharp decline in trading volume underlined softer market conviction ahead of the Lunar New Year. The benchmark Shanghai Composite eked out a 0.09% gain while the Shenzhen Component fell 0.35% and the tech‑and‑growth focused ChiNext index slid 1.08%. Notably, the combined turnover across the Shanghai and Shenzhen bourses dropped below Rmb2 trillion for the first time in 31 trading days, shrinking by Rmb121.3 billion from the previous session.
Market internals were lopsided: more than 3,200 stocks finished in the red, but a handful of cyclical and industrial pockets staged strong rallies. Chemical producers led the advance with several names posting consecutive limit‑ups—Jihua Group has hit four limit‑ups in five sessions—while Taihe New Materials, Baichuan and Cuhua also capped trading. Fiberglass and composites stocks, including Honghe Technology, Shandong Fiberglass, International Composite and China Jushi, experienced rapid gains and limit‑up moves.
Metals and mining segments were similarly active, with the tungsten sub‑sector conspicuously strong. Xianglu Tungsten recorded its second limit‑up in four sessions and Zhangyuan Tungsten hit the daily ceiling. Emerging niches such as compute‑capacity leasing (算力租赁) also attracted speculative capital, sending Nanxing and Dawei Technology to limit‑up finishes.
On the downside, consumer and entertainment‑linked names suffered a coordinated selloff. Cinema chains and film industry stocks were among the weakest; Hengdian Film plunged to a limit‑down and heavyweights such as Huayi Brothers, Huace Media and China Film posted steep declines. The large number of decliners and the fall in aggregate turnover point to cautious market positioning rather than broad fundamental repricing.
The drop in turnover matters because trading activity is the oxygen for China’s largely retail‑driven market. Seasonal factors around the Spring Festival often curb liquidity, but the scale of the decline—combined with a meaningful underperformance of growth‑oriented boards—suggests profit‑taking and risk aversion have intensified. International investors watching ChiNext and the STAR‑50 for exposure to China’s technology and innovation story will read the weakness as a reminder of the market’s sensitivity to short‑term flows and domestic sentiment.
Looking ahead, the market’s trajectory will hinge on whether liquidity normalises after the holiday, whether policymakers provide fresh reassurance to investors, and how corporate news flow evolves in heavily traded sectors. If turnover remains suppressed, expect greater volatility and a continued tilt toward cyclical and resource‑linked pockets where visible earnings or policy tailwinds are clearer than in longer‑duration tech names.