A-Share Market: Afternoon Sell-Off Deepens, Major Indices Drop Over 2%

China's three major A-share indices opened lower on June 16 (Thursday). After a brief recovery during morning trading that narrowed losses, the market turned south again in the afternoon, with declines significantly widening. At one point, all three indices dropped more than 2%.

The Shanghai Composite Index closed down 1.85% at 3,882.41 points. The Shenzhen Component Index fell 1.97% to 14,488.65 points, while the ChiNext Index dropped 2.95% to 3,692.46 points.

Total trading volume across the Shanghai and Shenzhen markets reached RMB 2.4036 trillion, down RMB 167.6 billion from the previous trading day.

According to a report by The Paper, Cai Xin Securities believes the overall market performance remains below expectations. One reason is that, against the backdrop of a rebound in overseas tech assets, A-share tech and innovation sectors have experienced significant negative feedback. The heightened short-term volatility in hard-tech sectors has not improved, which may dampen market sentiment and limit the momentum for broader market recovery and sector rotation.

Another reason is the consecutive days of shrinking market-wide trading volume, reflecting relatively weak investor confidence.

As such, the market may continue to consolidate at lower levels in the short term. A more positive signal is needed to confirm upward momentum—such as a strong volume-driven bullish candle, all three major indices reclaiming their 5-day and 10-day moving averages, or improved sustainability in hot sector performances.

Until such signals emerge, investors are advised to maintain appropriate position control and adopt a rotational trading strategy under a volatile market assumption. Participation should be increased only after clear positive signals appear.

Cai Xin Securities noted that July represents a transitional phase for the market. Volatility is expected to remain high, and investors are advised to focus on balanced portfolio allocation.