China’s equity markets witnessed a dramatic intraday reversal on Tuesday, as the ChiNext Index clawed back from early losses to close up 0.54%. Despite the green finish for key growth indices, the underlying market health told a different story, with more than 4,000 individual stocks ending the day in negative territory. This divergence highlights a bifurcated market where liquidity is aggressively chasing a narrow set of winners.
Trading activity remained exceptionally high, with combined turnover on the Shanghai and Shenzhen exchanges reaching a staggering 3.24 trillion RMB. This surge in volume, an increase of 38 billion RMB from the previous session, underscores a period of intense speculation and rotation. Investors appear to be rapidly reshuffling portfolios as they grapple with shifting narratives in the technology and industrial sectors.
The day’s gains were concentrated in high-end hardware and energy infrastructure. Printed Circuit Board (PCB) manufacturers led the charge, with stocks like Shengyi Electronics hitting record highs and others reaching their daily limit. This suggests that while the broader market is cooling, capital remains heavily positioned in the physical components required for China’s AI and digital transformation.
Conversely, the compute-for-rent and memory chip sectors faced a sharp correction. The sell-off in these previously hot segments indicates a tactical retreat from speculative software-based AI plays toward more tangible hardware and power infrastructure. Analysts warned that the extreme volatility, including flash crashes of previous high-flyers, points toward a potential peak in near-term retail sentiment.