China Stocks Extend Declines

The Shanghai Composite fell 0.3% to 4,095 on Wednesday, while the Shenzhen Component dropped 0.4% to 15,792, extending losses from the previous session as concerns over strains between China and Japan weighed on investor sentiment, with little fresh news to drive markets. China has effectively halted exports of certain tungsten products to Japan this year, while shipments of rare-earth magnets in May fell to their lowest level since May 2025, when Beijing first introduced its global export-control regime. The restrictions, which also covered dysprosium and terbium, have persisted amid a diplomatic dispute triggered by Japanese Prime Minister Sanae Takaichi’s remarks on Taiwan last November. Leaders of Asia’s two largest economies are set to attend the Asia-Pacific Economic Cooperation forum in Shenzhen, though prospects for a bilateral meeting remain unclear. Notable laggards included Zijin Mining Group (-1.2%), Foxconn Industrial Internet (-1.5%), and NAURA Technology (-2.7%).

The Shangai Composite Index fell 57 points or 1.37 percent on Tuesday to close at 4106 points. Leading the losses are China Molybdenum (-9.98%), Zijin Mining (-9.00%) and Aluminum Corporation of China (-7.61%).

The Shanghai Composite dropped 1.37% to close at 4,106 on Monday, while the Shenzhen Component slumped 3.17% to 15,854, with both benchmarks retreating from a one-month high and an over eleven-year peak, respectively, tracking overnight losses on Wall Street amid pressure on technology stocks. Major US tech stocks fell broadly as investors grew wary that the sector’s prolonged rally may have become overstretched. Chinese technology sector also traded lower, including Zhongji Innolight (-5.23%), Eoptolink Technology (-4.82%), and Victory Giant Technology (-7.44%). In contrast, financial stocks outperformed, particularly Industrial and Commercial Bank of China (2.5%) and Agricultural Bank of China (2.66%). On the economic front, China’s cumulative fiscal deficit narrowed for the first time in more than two years, with the combined shortfall across its two main government budgets falling to 3.16 trillion yuan in January–May despite weak domestic demand and sluggish economic growth.