Chinese stocks reversed course on Tuesday after a previous day of gains, as concerns over rising U.S. interest rates weakened investor sentiment. The Shanghai Composite Index closed down 0.67% at 3,655.83, the Shenzhen Component Index fell 1.68% to 11,197.98, and the ChiNext Index dropped 2.44% to 2,509.43.
The U.S. Consumer Price Index (CPI) for October rose 0.4% from the previous month, exceeding market expectations of 0.3%. The market now assesses a 90.8% probability of a 0.25 percentage point rate hike by the Federal Reserve in December. Rising interest rates diminish the relative attractiveness of stocks, particularly growth stocks with high valuations.
The controversy surrounding NVIDIA CEO Jensen Huang also impacted global tech investment sentiment. Doubts lingered regarding the scale of investments in AI data centers and the potential for realizing investment returns.
In a report, Xinyi Securities stated, "As global tech companies significantly increase their AI investments, skepticism about investment returns is growing, and concerns about an investment bubble in the AI sector are emerging due to declining free cash flow for some companies. Geopolitical tensions, fluctuations in international energy prices, and the potential for interest rate hikes in developed countries are dampening risk asset investment sentiment." The firm also noted that profit-taking demand is emerging from previously high-flying tech growth stocks.
On the day, the AI semiconductor sector showed strength. Tianpu Guofen hit its upper limit, while Suiyuan Technology surged over 12%, reaching a record high since its listing. Analysts predict that Chinese semiconductor companies will benefit from increased U.S. restrictions on semiconductor exports to China due to the Jensen Huang scandal. Additionally, Alibaba's AI semiconductor subsidiary, T-Head, announced plans for an independent listing. Alibaba disclosed on the evening of November 10 that it had submitted application documents for the spin-off listing of T-Head. As of April 2026, T-Head's dedicated AI semiconductor series, the Zhenwu series, had accumulated shipments of 560,000 units, with over 650 customers.
Shares related to specialty gases for semiconductors also rose, with Zhongchuan Special Gas and Feiwotai recording significant gains. Expectations for an improvement in the semiconductor industry are believed to have stimulated investor sentiment. According to a report from the Semiconductor Equipment and Materials International (SEMI), global silicon wafer shipments increased by 13.4% year-on-year in the third quarter of 2026. The ongoing expansion of semiconductor production facilities continues to drive demand for specialty gases.
Meanwhile, the People's Bank of China set the yuan's central parity rate against the dollar at 6.7174 yuan, a decrease of 0.0017 yuan from the previous day, reflecting a 0.02% increase in the yuan's value.
* This article has been translated by AI.
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