China's three major A-share indices opened lower and continued their downward trajectory during Wednesday's morning session, with the Shanghai Composite Index breaking below the 3860-point level at one stage. The Shenzhen Component Index and the ChiNext Index both declined by more than 2%, reflecting a market environment characterized by broad index pullbacks, widespread individual stock losses, and selective strength in defensive sectors.
By the midday close, the Shanghai Composite Index had fallen 1.82% to 3862.73 points, while the Shenzhen Component Index dropped 2.34% to 13298.77 points. The ChiNext Index lost 2.04% to 3270.35 points. The STAR 50 Index tumbled 2.99%, and the Beijing Stock Exchange 50 Index slid 3.52%. More than 5,100 stocks across the market traded in negative territory. Combined turnover for the Shanghai, Shenzhen, and Beijing exchanges reached 1.2847 trillion yuan by midday, expanding by approximately 183 billion yuan compared with the previous session.
On the capital flow front, main funds showed net inflows into ground force equipment, digital media, and China Ordnance-related sectors, with the ground force equipment segment attracting approximately 980 million yuan in net main fund inflows.
Market Overview
Regarding gainers, the Ordnance industry group restructuring concept and the power sector demonstrated notable resilience against the broader market decline. Film and television exhibition, military equipment, and high-speed copper cable connection segments also showed localized strength. Conversely, precious metals, industrial metals, and energy metals led the losses, while sugar substitute concepts and electronic chemicals sectors weakened in tandem.
The overall market sentiment leaned cautious following the overnight release of a higher-than-expected US August Producer Price Index reading and a substantial surge in international oil prices. These factors reinforced market bets on a Federal Reserve rate hike next week, strengthening the US dollar and Treasury yields while triggering a collective slump in international metal prices. A-share resource-related sectors bore the brunt of this pressure, with declining stocks vastly outnumbering advancers. Investment capital rotated toward defense and power names as contrarian plays.
Hot Sectors
1. Military Equipment Sector Shows Resilience
The military equipment sector displayed notable counter-trend strength, with Inner Mongolia First Machinery Group hitting the daily limit during intraday trading alongside Optoelectronic Technology. North Long Range Technology advanced more than 6%, with Tianqin Equipment and Hunan Boyun New Materials also posting solid gains.
Analysis: The Ordnance industry group restructuring concept remained active during the session. In June 2025, with State Council approval, China South Industries Group Corporation underwent a corporate split, with its automotive business carved out to form Changan Automobile Group. The State-owned Assets Supervision and Administration Commission subsequently injected the separated Ordnance Industry Group equity into China North Industries Group Corporation as capital contribution. The relevant industrial and commercial registration procedures were completed by the end of July 2025, drawing market attention to the progress of military asset consolidation.
2. Power Sector Rallies Against the Trend
The power sector showed strong intraday momentum, with Hangzhou Heat Power and Jiangsu New Energy hitting the daily limit. Mindong Electric Power secured its third consecutive limit-up, while Zhejiang New Energy and Topray Solar both surged more than 7%. Hunan Development advanced over 6%.
Analysis: According to State Grid Corporation of China data, 15 new cross-regional DC transmission lines will be commissioned during the 15th Five-Year Plan period, boosting cross-provincial transmission capacity to 500 gigawatts, an approximately 35% improvement over the end of the 14th Five-Year Plan period. As of July 2026, State Grid has completed and operationalized 43 ultra-high-voltage projects comprising 22 AC and 21 DC lines, with an additional 15 projects currently under construction, including eight AC and seven DC lines.
3. High-Speed Copper Cable Connection Stocks Gain Traction
Stocks within the high-speed copper cable connection segment strengthened against the market tide, with Shenyu Communication Technology hitting the daily limit, joined by Mentor Media and Wuhan Fingu Electronic. Zhaolong Interconnect surged more than 10%, while Yonyou Optoelectronics and Yangtze Optical Fibre and Cable closed higher despite the overall market weakness.
Analysis: Corning has signed a multi-year optical fiber supply agreement with Verizon to deliver over 80 million miles of high-density optical fiber and connectivity solutions between 2027 and 2032, supporting home broadband coverage and AI data center backbone network infrastructure. Additionally, the 2026 China International Optoelectronic Expo opened in Shenzhen on September 9, featuring 1.6T optical module products, drawing renewed attention to the fiber optic and cable demand driven by AI computing power expansion.
4. Cultural Media Sector Shows Selective Strength
The cultural media sector demonstrated localized activity, with Fengyuzhu hitting the daily limit and Yangcheng Evening News rising more than 7%. Ireader Technology advanced over 6%, while Qingdao Media Networks gained 4%.
Analysis: On the individual stock front, Fengyuzhu has established an "Embodied Intelligence Research Institute" and signed a strategic cooperation agreement with Songyan Robotics, aiming to provide embodied intelligence solutions for cultural venues and cultural tourism districts. The company is also advancing the application of virtual reality, mixed reality, and AIGC technologies in the cultural, museum, and tourism sectors, which has fueled localized momentum in the media and film-television directions.
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