After a brief rebound, the broader market showed renewed divergence on Monday. The Shanghai Composite Index opened higher and traded in a narrow range, with its intraday recovery meeting resistance at the 10-day moving average, ultimately closing with a significantly narrowed gain. The Shenzhen Component Index managed to climb above its 10-day moving average in early trading but faced pronounced selling pressure, turning negative by the afternoon. Both the ChiNext Board and the STAR Market fell by more than 1% as technology stocks broadly weakened.
By the close, the Shanghai Composite Index stood at 3,940.55 points, up 0.2%; the Shenzhen Component Index settled at 13,703.21 points, down 0.52%; and the ChiNext Index finished at 3,359.72 points, a decline of 1.15%. In terms of turnover, the combined trading volume across the Shanghai, Shenzhen, and Beijing exchanges reached 1.98 trillion yuan, up modestly by about 14 billion yuan from the previous session.
Sector performance was mixed, with agriculture, coal, petrochemicals, and medical services leading the gains, while batteries, IT equipment, consumer electronics, and semiconductors were among the biggest decliners. Despite the overall market pressure, advancing stocks outnumbered decliners, with over 3,400 stocks trading higher and more than 70 hitting the daily limit up, against roughly 2,000 losing stocks.
Notably, the tech sector experienced what market watchers call a 'one-day wonder' rally. Chen Yuheng, a senior investment advisor at Jufu Investment, commented that after the previous session's broad surge in computing hardware, short-term capital accumulated substantial floating profits. 'Today's rally triggered concentrated profit-taking pressure, which on the surface looks like a profit-taking sell-off, but the deeper reason is that the market remains in a typical zero-sum game pattern. The half-day turnover stayed high, but it was mostly from position swapping rather than significant new external capital inflows,' Chen explained. 'The tech sector is severely diverging internally. Some popular names reversed lower after initial rallies, while followers opened high and sold off. This isn't the end of the trend but a normal test of divergence after a rebound.'
The weakening trend in the afternoon session was partly attributed to the broader decline in Asia-Pacific equities. Overseas, South Korea's KOSPI index reversed from an early gain of nearly 2.5% to turn negative, while Japan's Nikkei 225 widened its losses to 1.7%. The synchronized retreat across Asia-Pacific markets reflects global investors' caution ahead of the U.S. Federal Reserve's mid-September policy meeting.
Shenwan Hongyuan Securities noted that ahead of the September FOMC meeting, the market will be in a waiting period for data validation. 'The uncertainty in the overseas liquidity environment remains the biggest external variable suppressing risk appetite for tech stocks,' the firm said. In the short term, once the Fed meeting concludes in mid-September, overseas uncertainties are likely to clarify, potentially helping the A-share market gradually emerge from its consolidation phase.
Chen Yuheng added that the fundamental improvements verified in interim earnings provide a 'floor' of support for the market. 'There is still room for further policy easing. The tech sector is currently in a 'strong reality, weak expectations' phase, where oscillation and repeated testing are normal for bottoming. Once external headwinds subside and market consensus rebuilds, a new round of advances could be ready to launch,' he concluded.
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