Chinese semiconductor and computing hardware stocks experienced a broad sell-off, with optical modules and semiconductor equipment leading the declines, significantly dragging down the ChiNext and STAR 50 indices. This follows reports that investor concerns over inflated valuations for artificial intelligence (AI) concept stocks triggered a sharp sell-off in the U.S. chip sector, with the panic sentiment quickly spreading to the Asia-Pacific markets.

On July 2nd, the A-share market opened sharply lower, with all three major indices falling at the start of trading. The ChiNext Index at one point plunged over 4%, while the STAR 50 Index tumbled nearly 5%. Computing hardware and semiconductor stocks declined across the board, with glass substrates, semiconductor silicon wafers, and wafer manufacturing leading the losses. Key semiconductor stocks fell together, with Zhaoyi Innovation dropping over 8%. Precious metals and coal sectors moved higher, while the innovative drug sector showed renewed activity.

The Hong Kong stock market opened higher and continued to gain, with both the Hang Seng Index and the Hang Seng Tech Index rising more than 1%. Semiconductors led the declines, with Zhaoyi Innovation down over 12%. Tianshu Zhixin, Huahong Hongli, Lanke Technology, and SMIC all fell collectively. Technology and internet stocks rose broadly, with Baidu, JD.com, Kuaishou, Alibaba, and Tencent all posting gains. Biopharmaceutical stocks surged significantly, with the Hang Seng Biotechnology Index soaring 6%.

In the bond market, treasury futures rose across the board. In commodities, domestic commodity futures were mixed, with metals like Shanghai silver rebounding. Key market movements are as follows:

A-Shares: At the time of writing, the Shanghai Composite Index was down 1.23%, the Shenzhen Component Index was down 2.94%, and the ChiNext Index was down 3.67%.

Hong Kong Shares: At the time of writing, the Hang Seng Index was up 1.26%, and the Hang Seng Tech Index was up 1.18%.

Bond Market: Treasury futures rose across the board. At the time of writing, the 30-year main contract was up 0.02%, the 10-year main contract was up 0.02%, the 5-year main contract was up 0.02%, and the 2-year main contract was up 0.01%.

Commodities: Domestic commodity futures were mixed. At the time of writing, platinum, palladium, Shanghai silver, soybean meal, and eggs all rose over 1%. Shanghai gold, iron ore, lithium carbonate, pulp, alumina, the containerized freight index, industrial silicon, Shanghai aluminum, Shanghai tin, caustic soda, and rapeseed moved higher. Shanghai copper, rebar, rubber, hot-rolled coil, glass, ferromanganese silicon, Shanghai nickel, polysilicon, coking coal, and stainless steel declined. Coke fell over 1%, asphalt dropped 2%, while fuel oil and crude oil fell more than 3%.

Innovative Drug Sector Update

The innovative drug concept continued its previous strength. Hainan Haiyao hit its sixth limit-up in eight days, Jingxin Pharmaceutical rose by the daily limit at the open, while Huiyu Pharmaceutical, Haofan Biotech, Rejing Biotech, and Shiyao Jingfeng were among the top gainers.

On the news front, the National Healthcare Security Administration announced the preliminary review results for the 2026 National Reimbursement Drug List, with 557 drugs passing the initial review for the national list and 54 drugs passing for the commercial insurance innovation drug directory. This signals that the "national insurance + commercial insurance" dual-directory negotiation has entered a substantive advancement stage. Simultaneously, new mechanisms such as a pre-declaration system and an 8-year price protection have been implemented, further improving the innovative drug payment system and providing more stable policy expectations for the commercialization of innovative drugs.

AI Application Segment Performance

In early trading, the AI application segment showed resilience against the broader downturn. Fushi Holdings, Tiandi Online, Huanrui Century, Gravity Media, and Tianyu Shuke rose by the daily limit. Liujin Technology, Yinsai Group, Shengwang Group, and BlueFocus followed with gains. Overnight, U.S. software and internet stocks broadly rebounded, with Meta Platforms, Inc. rising over 8% and Palantir gaining over 7%.

ChiNext Index Movement

The ChiNext Index fell over 4%. Losses were led by computing hardware and semiconductor chip sectors, with nearly 3,200 stocks declining across the Shanghai, Shenzhen, and Beijing markets.

Market Opening Levels

The Shanghai Composite Index opened 1.42% lower, while the ChiNext Index opened down 2.94%. Computing hardware and the semiconductor industry chain saw significant declines, with memory, PCB, CPO, and lithography machine sectors leading the drop. Gold, AI applications, real estate, agriculture, and banking sectors strengthened.

Hong Kong Market Opening

The Hang Seng Index opened 0.83% higher, and the Hang Seng Tech Index opened up 1.25%. XPeng and Baidu rose nearly 5%, while Leapmotor, Kuaishou, JD.com, and Xiaomi gained over 3%. Huahong Hongli fell over 7%, and SMIC dropped nearly 6%.