The Shanghai Composite fell 0.39% to close at 4,003, while the Shenzhen Component dropped 1.03% to 13,289 on Tuesday as investors took profits after the Shanghai index hit fresh decade highs. Sentiment weakened further after reports that China is developing a rare earth export system that could restrict access for some US firms, raising the risk of renewed Sino-US trade tensions as rare earths remain central to recent negotiations. Investors also rotated out of high-flying technology and AI-linked stocks into high-dividend value plays amid doubts that tech earnings can justify lofty valuations. Several veteran Chinese fund managers reportedly halted new subscriptions to their products amid bubble concerns. Sharp losses were seen from tech firms such as Zhongji Innolight (-4.5%), Eoptolink Technology (-3%), Cambricon Technologies (-4.4%), Shannon Semiconductor (-9.8%), and Victory Giant (-4.2%).
