China Stock Markets Retreat After Intraday Rally; Biotech and Semiconductor Stocks Drag Down A-Shares, ChiNext Drops 1.4%

China's A-share market rallied during the day but reversed course on Friday (28th), ending with major indices collectively lower. By the close, the Shanghai Composite Index stood at 3,952.18 points, down 0.11%; the Shenzhen Component Index closed at 13,953.07 points, down 0.68%; and the ChiNext Index fell 1.41% to 3,424.40 points. Total trading volume on the Shanghai and Shenzhen exchanges reached 2.1 trillion yuan, a slight decrease of 24.2 billion yuan from the previous trading day.

In contrast, Hong Kong's major indices showed mixed performance. By the close, the Hang Seng Index edged up 0.07% to 25,584 points; the Hang Seng Tech Index dipped 0.33% to 4,605 points; and the Hang Seng China Enterprises Index closed flat at 8,490 points. Driven by risk-averse sentiment and interest rate cut expectations, gold and precious metals surged across the board in Hong Kong. Memory and PCB-related sectors underperformed, while Zhipu, a tech index constituent that surged yesterday, plunged 6.03% today.

On the mainland market, the chemical and agriculture sectors stood out as strong performers, leading the counter-trend rally. The chemical sector saw sharp gains, with multiple stocks including Jin Niu Chemical, Hua Jin Shares, Lu Hua Technology, Lu Tianhua, Chi Tianhua, Fu Lai En Te, and You Fu Shares hitting the daily trading limit. PTFE-related stocks such as Hao Hua Technology and Wo Te Shares achieved two consecutive limit-up days.

The agriculture sector led the gains, with Wanxiang De Nong posting six gains in nine days. Xin Sai Shares, Dunhuang Seed Industry, Fujian Jin Sen, and Xian Da Shares also surged to their daily limits. Additionally, gold-related concepts, cybersecurity, and certain AI application stocks rose amid intraday volatility.

In contrast, the pharmaceutical, semiconductor chip, and computing hardware sectors faced downward pressure. The pharmaceutical sector declined, with Wanbang Medicine dropping over 17%, and Bai Hua Medicine, CanSino, Jian Kai Technology, and Shanghai Yi Zhong also falling sharply. Semiconductor and computing hardware stocks performed weakly, with Pu Ran Shares, Chao Chun Materials, Yuan Jie Technology, and Heng Dong Guang among the worst performers.

Looking ahead, most institutions expect continued market volatility with potential rebounds. Zhang Yusheng, a strategist at Everbright Securities, believes the market will likely remain range-bound in the short term. While downside risks are limited, broad-based rallies are not yet supported by macroeconomic fundamentals. He recommends focusing on high-growth sectors, including hard tech and basic chemicals with improving fundamentals.

Hua An Securities' strategy team noted that external risks are temporary disruptions. With strong mid-year earnings confirming high growth momentum, they maintain that the rebound trend since August remains intact. The technology theme continues to dominate, and oversold segments of the AI supply chain remain attractive investment opportunities.