The Shanghai Composite Index declined 0.4% to 3,951 on Tuesday, while the Shenzhen Component Index lost 0.5% to close at 14,249, as investor sentiment weakened amid fading optimism over a near-term easing of US-Iran tensions. Caution in the market deepened after US President Donald Trump called on Iran to compensate victims of conflicts involving Tehran, while Iranian officials demanded reparations for damage from recent US and Israeli strikes. This renewed diplomatic stalemate dampened expectations for a prompt reopening of the Strait of Hormuz, heightening concerns that ongoing disruptions to shipping through the key waterway could persist and continue to weigh on global risk appetite.
Risk sentiment was further undermined by renewed selling in AI-related shares, as investors rotated into more defensive sectors amid rising volatility in the AI trade. Notable decliners included Zhongji Innolight (-6.0%), Eoptolink Technology (-5.1%), Cambricon Technologies (-2.1%), Hygon Information Technology (-1.6%), and SMIC (-1.1%).
