Turbulence in China Stocks Amid U.S. Trade Tensions and Chip Sector Concerns

China stocks experienced volatility on Tuesday due to increased U.S.-China trade tensions and concerns over the chip sector. Defensive plays saw gains, with tech sectors facing losses. Profit-taking pressure rose following a brief rebound, leading analysts to recommend diversified investments in domestic-demand industries and high-dividend strategies.

China stocks remained volatile on Tuesday as traders navigated renewed U.S.-China trade tensions alongside fresh geopolitical frictions in the chip industry. The blue-chip CSI300 index slightly dipped by 0.1% by midday, despite a 1% gain earlier.

The Shanghai Composite index saw a modest rise of 0.2% to 3,897.56 points, but its gains narrowed following the announcement of additional port fees on Chinese and U.S. vessels by Beijing and Washington, opening a new chapter in their ongoing tariff dispute.

This tension, coupled with the Dutch government's move to seize control of Chinese-owned Nexperia, spurred concerns over technological security. The tech sector took a significant hit, with the CSI Semiconductor Industry Index dropping over 5% and the CSI Artificial Intelligence Index declining by 3.6%.

(With inputs from agencies.)