China's three major A-share indices opened higher collectively on September 4, but the gains quickly faded. Both markets experienced a downward trend in the morning session, narrowing the earlier advances. In the afternoon, a sharp decline in the semiconductor sector triggered a rapid sell-off across the major indices, leading to a one-way downward trajectory.

From a sector perspective, AI hardware came under significant pressure, sliding continuously throughout the afternoon before staging a modest rebound at the close. Agriculture, forestry, animal husbandry, and fishery sectors, along with media and baijiu (Chinese liquor) stocks, showed strength. Real estate, military, and banking shares were notably active, with China CITIC Bank (601998) hitting a new high.

By the closing bell, the Shanghai Composite Index fell 0.3% to 3,930.12 points, the Shenzhen Component Index dropped 0.79% to 13,516.97 points, and the ChiNext Index declined 0.78% to 3,286.55 points. According to Wind statistics, across the two exchanges and the Beijing Stock Exchange, 2,442 stocks advanced while 2,909 declined, with 198 remaining flat.

Total turnover for the two markets reached 2,030.7 billion yuan, an increase of 271.8 billion yuan from the previous trading day's 1,758.9 billion yuan. Shanghai's turnover was 938.3 billion yuan, up 118.4 billion yuan from the prior session's 819.9 billion yuan, while Shenzhen's turnover stood at 1,092.4 billion yuan. Data from Dazhihui VIP showed that 63 stocks across the two markets and the Beijing Stock Exchange gained more than 9%, while 21 stocks fell by more than 9%.

Agriculture and Fishery Sectors Lead Gains While Electronics Drags Market

The agriculture, forestry, animal husbandry, and fishery sectors led the market gains, with stocks including Yasheng Group (600108), Luoniushan (000735), Xin Wufeng (600975), Zhenghong Technology (000702), Been Group (001366), and Lvkang Biochemistry (002868) hitting the daily limit or rising over 10%.

Media stocks continued their upward momentum, with Yidian Tianxia (301171), Huanrui Century (000892), China Publishing (601949), and Longban Media (605577) either hitting the limit up or gaining more than 10%. Tianyu Digital (002354), Century Huatong (002602), and Publishing Media (601999) all rose more than 6%.

Banking shares performed actively, with Shanghai Pudong Development Bank (600000), Industrial Bank (601166), China Merchants Bank (600036), China CITIC Bank (601998), and Bank of Communications (601328) all gaining over 1%. A research report from CITIC Securities noted that the 2026 semi-annual reports for the banking industry show optimistic net interest margins, stable asset quality, and generally positive revenue performance with some divergence, while profit growth continues its recovery pattern. Additionally, some banks have raised dividend payout ratios to boost shareholder returns, which benefits long-term investor allocation. Capital flow analysis indicates sustained long-term inflows into the banking sector, primarily driven by insurance funds and other low-risk-appetite capital showing continued willingness to allocate to A-share and H-share banks, with increased allocation during the first half when passive funds were flowing out. Looking ahead to the third quarter, core variables such as net interest margins and asset quality are expected to remain stable, with a positive full-year earnings trend. Combined with ongoing long-term macroeconomic narratives, absolute returns for the year are expected to continue.

The semiconductor sector plunged sharply, with Guokewei (300672) and Hua Hong Semiconductor (688347) falling over 8%, while Weice Technology (688372), Silicon Power (301629), Shengke Communications (688702), Zhongke Feice (688361), and Lianyun Technology (688449) dropped more than 6%. The electronics sector led declines, with Jiebang Technology (301326), Qiangyi Shares (688809), Hua Hong Semiconductor (688347), Yidong Electronics (301123), Kesen Technology (603626), and Bayi Shikong (688181) all falling over 7%. Building materials also dropped significantly, with Honghe Technology (603256) hitting the daily limit down, and Jiuding New Materials (002201), Shandong Fiberglass (605006), Wanli Stone (002785), China Jushi (600176), and Kaier New Materials (300234) declining over 4%.

Searching for Structural Opportunities

A research report from Huatai Securities stated that the global low-interest-rate paradigm is being broken, with shrinking savings supply coupled with simultaneous leverage increases from governments and AI, creating an imbalance in capital flows that makes long-term rates prone to rising rather than falling. On the savings side, four major changes are pushing savings from abundance to scarcity: aging populations in China, Japan, and Europe; geopolitical obstacles to dollar repatriation; high inflation constraining central bank balance sheet expansion; and risk appetite lowering savings rates. On the demand side, the US is trapped in a debt expansion cycle characterized by high interest rates, high deficits, and high leverage, while tech giants' bond issuance has reached the same order of magnitude as Treasury net issuance, with AI financing beginning to crowd out US Treasuries. Risks to watch include the debt ceiling in early 2027, fragility in basis trades, and financing risks if AI revenue growth slows. Under high interest rates, asset performance diverges, with gold and tech stocks forming a core barbell portfolio betting respectively on financing risk exposure and AI narrative realization, while low-leverage, strong cash-flow companies and resource commodities provide defensive positions. Strategically, with no clear short-term market theme, the recommendation is to seek structural opportunities along the lines of high prosperity, low crowding, and marginal policy catalysts.

Zhang Yidong, chief economist at Haitong International, recently released a research report indicating that US Treasury yields remain the primary short-term disturbance for the autumn market rally. The pre-September FOMC meeting volatility is manageable, and market fluctuations present buying opportunities for stocks. In the third quarter, long-end US Treasury yields are expected to spike higher before retreating. It is possible that 10-year Treasury yields could surge to around 5% in September before returning to approximately 4.3% in the fourth quarter. The AI rally can continue but has entered its "autumn" phase, with short-term consolidation serving to confirm new logic. From an investment perspective, being vaguely right is better than being precisely wrong. This AI technology wave represents an epic technological revolution, with this AI Juggernaut cycle expected to last at least until early 2028, and the AI rally likely to extend into next year.