Chinese equities experienced a significant sell-off in the afternoon session, with the ChiNext Index plunging over 2%. Capital flocked to defensive, low-valuation sectors such as large financials, real estate, and consumer staples, while high-flying themes like computing power suffered heavy losses. The total market turnover for the day reached 2.2 trillion yuan, shrinking by over 100 billion yuan compared to the previous session. More than 4,500 stocks declined across the two exchanges.
Two primary risk factors are currently capturing market attention. On Monday, a drone attack triggered a fire at the Shah sour gas field in the United Arab Emirates. Concurrently, a spokesperson for Iraq's oil ministry confirmed an assault on the Majnoon oil field, a key asset in southern Iraq, although specific damage details were not disclosed. As Middle East tensions escalate, crude oil prices have rebounded strongly after recent pullbacks, surpassing $100 per barrel.
Additionally, despite Nvidia announcing several technological breakthroughs at its GTC conference, related A-share computing power stocks fell sharply. Analysts suggest that the guidance for some of Nvidia's next-generation chips, slated for a 2028 release, has created near-term uncertainty. While the iterative advancements in related optical communication technologies present long-term benefits, the impact on the subsequent growth of the industrial chain remains uncertain for yield-seeking capital. This uncertainty, combined with high valuations and substantial prior gains within the sector, has led to significant short-term selling pressure.
In market movements, large financial stocks bucked the downward trend, with insurance and banking sectors leading the gains. Aijian Group hit the upside limit, while China CITIC Bank, New China Life Insurance, and China Pacific Insurance all closed higher. The chemicals sector saw repeated activity, with Chitianhua securing its third consecutive limit-up, and Sanfangxiang, Kingenta, and Luhua Technology also rising by the daily limit. The real estate sector oscillated higher, with Zhongzhou Holdings and Jingneng Real Estate reaching the upper limit.
On the downside, computing power hardware and semiconductors were among the worst performers. The CPO (Co-Packaged Optics) concept stocks collectively adjusted, with Changguang Huaxin, Dexinli, Luoboteke, and Guangku Technology experiencing substantial declines.
Looking at individual stocks, 867 companies advanced, 4,541 declined, and 81 ended flat across the two exchanges. Fifty-two stocks rose by the 10% daily limit, while 15 fell by the limit.
At the close, the Shanghai Composite Index was down 0.85% at 4,049.91 points, with a turnover of 951.2 billion yuan. The Shenzhen Component Index fell 1.87% to 14,039.73 points, with a turnover of 1.2566 trillion yuan. The ChiNext Index dropped 2.29% to 3,280.06 points.
**Capital Flows** Mainstream capital focused on sectors like securities, banking, and insurance today. Stocks such as GCL System Integration, Shanzi High-Tech, and Huadian New Energy saw significant net inflows from major funds.
**Key News Recap** 1. **National Energy Administration: Jan-Feb Electricity Consumption Up 6.1% YoY** The National Energy Administration released data on electricity consumption for January and February. Cumulative electricity consumption reached 1,654.6 billion kWh, a year-on-year increase of 6.1%. By sector, primary industry consumption was 22.3 billion kWh, up 7.4%. Secondary industry consumption was 1,027.9 billion kWh, up 6.3%, within which industrial electricity use grew 6.4%, and consumption by high-tech and equipment manufacturing surged 10.6%.
2. **Ministry of Finance: Continued Proactive Fiscal Policy in 2026** The Ministry of Finance released a report on the execution of China's fiscal policy in 2025. It stated that a more proactive fiscal policy will continue in 2026, focusing on five key areas: Firstly, expanding the overall fiscal expenditure to ensure necessary spending intensity. Secondly, optimizing the mix of government bond tools to enhance their effectiveness. Thirdly, improving the efficiency of transfer payment funds to increase local fiscal autonomy. Fourthly, persistently optimizing the expenditure structure to strengthen support for key areas. Fifthly, enhancing fiscal and financial coordination to amplify policy effectiveness and stimulate microeconomic vitality.
3. **Alibaba Launches "Wukong", World's First Enterprise-Grade Agent Platform** Alibaba has launched "Wukong", touted as the world's first enterprise-grade AI-native work platform, aiming to provide every team and company with a "24/7 lobster army" of AI assistants. Wukong is a standalone application now available for invitation-based testing and will also be directly integrated into DingTalk, used by over 20 million organizations. It fully supports connecting users' DingTalk accounts, secure access permissions, and enterprise application systems.
**Market Outlook** 1. **CSC Financial: Market Consolidation Presents Buying Opportunities** Looking ahead, the current market consolidation offers a favorable window for strategic positioning. Capital is gradually shifting from speculative plays in high-flying themes to core assets with fundamental support. A dual-mainframe pattern, comprising high-end manufacturing/hard tech and strategic energy resources, is formally taking shape. Technology assets are gaining sustained attention from incremental funds, buoyed by positive fundamentals such as the implementation of top-level hydrogen industry policies, exploding global AI computing demand, and the acceleration of domestic substitution in high-end manufacturing, alongside a recovery in overseas tech stocks. Meanwhile, the price increase logic driven by optimized supply patterns for strategic energy resources, coupled with pre-profit growth targets showing high earnings certainty during the annual report season, is expected to further support market stabilization and upward movement. Investors are advised to focus on opportunities in high-end manufacturing and strategic energy resources.
2. **China International Capital Corporation (CICC): Prioritize "Industry Development" Over "Immediate Investment"** Investment logic differs between future industries and emerging industries. Many sectors are still in their very early stages within the A-share market. CICC recommends prioritizing "industry development" over "immediate investment positioning." In the short to medium term (around one year), it is advisable to monitor progress in future industries but avoid seeking immediate investment entry points for most areas, instead emphasizing the risks associated with the mismatch between asset prices and corporate development. Over the long term (one year or more), as industries mature, application pathways become clearer, more excellent companies emerge, and competitive landscapes solidify, investment opportunities can be identified more effectively.
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